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Last Updated: Friday, 30 June 2006, 13:39 GMT 14:39 UK
Russia and Ukraine agree gas deal
Gas transit plant near Kiev
About 80% of Russia's European gas exports pass through Ukraine
Ukraine has reached a deal with Russia to postpone any rise in gas prices for three months, avoiding the threat of wider disruption to European supplies.

Outgoing Ukrainian Prime Minister Yuri Yekhanurov said the deal would keep the price at $95 per 1,000 cubic metres.

In January Ukraine agreed to nearly double its Russian gas bill, ending a dispute that had hit European supplies, which are piped across the country.

But Ukraine's incoming prime minister, Yulia Tymoshenko, wants prices cut.

She faces opposition from the country's gas supplier, Russian gas monopoly Gazprom, which has said it wants to raise prices later in 2006.

It has suggested a price of more than $200 per 1,000 cubic metres.

Turkmenistan row

Ms Tymoshenko's chances of securing a price cut could also be dealt a blow if the current stand-off between Gazprom and the Turkmenistan government continues.

Gazprom supplies Ukraine with Russian and Turkmen gas, but Turkmenistan has threatened to halt supplies unless Gazprom meets its price rise.

It has a contract to supply Gazprom with gas at $65 per 1,000 cubic metres for the first half of this year, but after that it wants $100 per 1,000 cubic metres.

It has warned that gas supplies could be cut off as soon as September.

If Gazprom was to accept such a price increase, the cost would have to be passed on to Ukrainian consumers.

Ukraine is believed to be exploring the option of buying its gas direct from Turkmenistan, but such an arrangement would be limited by the fact that all but one of the pipeline export routes crosses Russian territory.

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