Russia and Ukraine have reached an agreement over Russian gas supplies after months of tripartite discussion with the European Union. Russian gas company Gazprom will resume gas supply to Ukraine, as soon as Ukraine pays debt and pre-payments. The total package is worth US$4.6bn, financed by the European Union, which will act as a guarantor for Ukraine's gas purchases, and by the International Monetary Fund. It includes US$1.45bn to be paid for gas deliveries from November 2014 to March 2015 (with US$760m as a pre-payment) and US$3.1bn for past deliveries to be paid by the end of the year. Should Ukraine fail to pay off for these past deliveries, Russia will interrupt gas supply. According to the agreement Ukraine will pay $378/1,000 m3 for gas in 2014 and $365/1,000 m3 in the first quarter of next year.
Gas supply to Ukraine was cut in June 2014 over a dispute over unpaid import bills and gas prices. Russia had doubled gas prices to US$485/1,000 m3 in February 2014, which was much higher than the European average. Ukraine wanted to stick to the price of US$268.5/1,000 m3 that Gazprom had offered earlier, but agreed to pay the alternative price of US$326/1,000 m3 proposed by the European Union. Russia had then offered to remove an export duty of US$100/1,000 m3, reducing the price to US$385/1,000 m3, which was refused by Kiev.
The agreement also secures gas supply for European customers as Russian gas supplies to Slovakia, Poland or Bulgaria started to be reduced.