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Russian, Ukrainian traders sign gas deal for 2007

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The deal, which was first confirmed earlier Tuesday by Ukrainian Prime Minister Viktor Yanukovych following talks with his Russian counterpart, is designed to improve relations between the former Soviet allies, which have been strained over a bitter gas-pricing row in early 2006.
MOSCOW, October 24 (RIA Novosti) - Russia and Ukraine signed an agreement Tuesday raising the price for natural gas deliveries from $95 per 1,000 cubic meters in 2006 to $130 per 1,000 cubic meters in 2007, a natural gas trader involved in the deal said.

That is a major victory for Ukraine, whose struggling economy is heavily dependent on gas from Russia, which earlier planned to raise the gas price to an average European level of $230 per 1,000 cubic meters. But experts said the post-Soviet state will have to make major concessions to Russia in bilateral and international issues in return.

RosUkrEnergo, the sole supplier of Russian and Central Asian gas to Ukraine since the start of 2006, signed a deal with UkrGazEnergo, the trader's joint venture with Ukraine's national oil and gas company Naftogaz, by which at least 55 billion cubic meters of gas from Central Asia will be supplied to the country in 2007 at $130 per 1,000 cubic meters.

The trader added Kiev will continue receiving gas at $95 per 1,000 cubic meters until the end of 2006.

"The sides have also agreed on the volume of natural gas deliveries in 2008-2009," RosUkrEnergo said. "The sides will calculate the price of deliveries based on the procurement price in Central Asian countries."

RosUkrEnergo receives a mixture of Russian and Central Asian gas from Russian energy giant Gazprom, which owns 50% of the company, and sells most of it to Ukraine, exporting the remainder to Europe.

The company said it had already signed contracts for 42 billion cubic meters of gas with Turkmenistan, 8.5 billion cubic meters with Kazakhstan, and 7 billion cubic meters with Uzbekistan for 2007.

The deal, which was first confirmed earlier Tuesday by Ukrainian Prime Minister Viktor Yanukovych following talks with his Russian counterpart, is designed to improve relations between the former Soviet allies, which have been strained over a bitter gas-pricing row in early 2006.

But rapprochement with Russia may stall the Western-leaning president's bid to join the WTO, NATO and the European Union, and require other concessions from Ukraine.

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