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Last Updated: Monday, 8 October 2007, 20:53 GMT 21:53 UK
Ukraine settles Russian gas row
Worker at gas station in Ukraine
Gas is one of the fault lines of Ukraine's relationship with Russia
Ukraine has settled a commercial dispute with Russian gas firm Gazprom, averting the risk of having its most important supply of energy cut off.

The Russian firm had threatened to stop supplying its neighbour unless a $1.3bn (650m) bill was paid this month.

But the two parties said they had reached a solution and would conclude an official agreement on Tuesday.

Previous disputes between the two have seen gas supplies to Ukraine stopped, with a knock-on effect across Europe.

Uneasy relationship

The European Commission had called for a "speedy solution" to the latest dispute after a similar row in early 2006 saw supplies to parts of central and western Europe interrupted.

The breakthrough came during a meeting between Ukrainian energy minister Yuriy Boiko and senior Gazprom executives.

"The sides agreed a scheme for paying off the debts of economic entities of Ukraine for the gas supplied this year," Gazprom said in a statement.

The dispute surrounded the payment of debts by Kiev relating to previous gas deliveries.

The timing of Gazprom's escalation of the dispute, coming two days after parliamentary elections in Ukraine saw supporters of pro-western President Viktor Yushchenko emerge in front, provoked claims of political manoeuvring.

Moscow has repeatedly denied accusations that it uses gas supplies to bully its neighbours.

Instead, it insists that price rises last year for Belarus, Ukraine and Georgia merely reflect the end of Soviet-era subsidies.



SEE ALSO
Profits rise at Russia's Gazprom
08 Oct 07 |  Business
Gazprom may cut gas to Ukraine
03 Oct 07 |  Business
Gazprom's European dilemma
26 Mar 07 |  Business
Russia and Ukraine near gas deal
24 Oct 06 |  Business

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