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Russia opens gas taps to Europe Russia opens gas taps to Europe
(about 2 hours later)
Russia's Gazprom has resumed gas supplies to Europe via Ukraine, raising hopes of an end to weeks of disruption. Russia has resumed gas supplies to Ukraine and Europe, raising hopes of an end to weeks of disruption.
A company spokesman told the BBC that full pressure in the pipeline system would be reached by mid-afternoon local time (approximately 1200 GMT). Gas is now flowing into Slovakia from Ukraine, a Slovak energy official said. Slovakia is among several EU member states hit hard by the gas shortage.
The move comes after the Russian and Ukrainian prime ministers agreed a new contract on the price of gas.The move comes after the Russian and Ukrainian prime ministers agreed a new contract on the price of gas.
Millions of Europeans have been without heat after the failure to renew the old contract, which expired on 1 January. Millions of Europeans have been without heat since the failure to renew the old contract, which expired on 1 January.
See map of countries hit by gas dispute See map of countries hit by gas dispute
EU states import a quarter of their gas from Russia and 80% of supplies come via Ukraine. Almost 20 countries in Europe have been affected by the dispute.EU states import a quarter of their gas from Russia and 80% of supplies come via Ukraine. Almost 20 countries in Europe have been affected by the dispute.
Some countries, including Bulgaria and Slovakia, rely almost entirely on Russia for gas, pumped via Ukraine.
They have had to shut down industrial plants and domestic heating systems, find alternative sources of gas or switch energy plants to oil. People have struggled to heat homes and schools.
'European' rates'European' rates
Gazprom spokesman Boris Sapozhnikov said the gas flow was restarted at around 1030 Moscow time (0730 GMT) on Tuesday. A spokesman for Russia's gas company Gazprom, Boris Sapozhnikov, said the gas flow was restarted at around 1030 Moscow time (0730 GMT) on Tuesday.
He said EU-led monitors would track the flow of the gas being pumped into Ukraine. Ukraine confirmed it was receiving gas, and was building up pressure in the system. "We will do our best to make it flow toward Europe as soon as possible," a spokesman said.
Ukrainian gas officials confirmed that they were receiving gas. Once pressure in Ukrainian pipes was high enough, "we will be able to resume transit" to Europe, a spokeswoman for pipeline operator Ukrtransgaz told the AFP news agency. There is no reason to believe that the situation with payments will improve after a significant price rise Gazprom chief Alexei Miller
Officials said the it could take up to 36 hours to pump gas across Ukraine, before it starts reaching customers further down the pipeline. Officials said it could take up to 36 hours to pump gas across Ukraine, before proper service was resumed to customers further down the pipeline.
Ukrainian Prime Minister Yulia Tymoshenko earlier held talks with Russian Prime Minister Vladimir Putin in Moscow after the two countries' gas companies, Gazprom and Ukraine's Naftogaz, succeeded in hammering out the final details. But after several false dawns, the EU would only "be fully satisfied after three or four days of supplies to Europe," said Czech minister Martin Riman, speaking for the EU.
Under the deal they outlined, Ukraine will start paying for Russian gas at "European" rates from 2010 while equally charging Russia "market" rates for transit. Gas flows were resumed after Russia and Ukraine finally agreed prices at which Ukraine would buy Russian gas, and ship it to European customers.
Ms Tymoshenko says Kiev will pay less than $250 (£175) per 1,000 cubic metres of Russian gas in 2009, although final confirmation of the agreed price has not been issued by either Ukraine or Russia. Previously Ukraine has paid a heavily discounted rate. But Gazprom confirmed that Ukraine would start paying the market rate - with a 20% discount for the rest of this year.
Last year, Ukraine paid $179.50 per 1,000 cubic metres, while the current average European price is more than $400. Vladimir Putin said he hoped the deal would mean better ties with Ukraine
Russia will pay a discounted rate for transit in 2009, before paying the market rate from 2010.
"In the first quarter of 2009, the price of gas for Ukrainian customers will be $360 per 1,000 cubic metres. The price will change quarterly under the formula," Gazprom said in a statement.
That compares to the market rate paid by European customers of about $450 - but is a major hike for Ukraine, which until December was paying only $179.50.
However, it is predicted that the $360 figure will fall dramatically. Gas prices tend to shadow oil prices, which have already plunged from record highs.
By midsummer, Ukraine could be paying as little as $150, Ronald Smith, a strategist at Moscow's Alfa Bank, told the Associated Press.
Ukrainian Prime Minister Yulia Tymoshenko said Kiev would end up paying less than $250, on average, over the course of 2009.
Future uncertain
However, Bohdan Sokolovsky, energy adviser to Ukrainian President Viktor Yushchenko - a bitter rival of the prime minister - criticised the deal, saying it favoured Russia and would impose hardship on Ukraine.
And, although the deal lasts for 10 years, the row might still erupt in future.
Gazprom said the deal allowed it to demand that Ukraine pay for gas in advance if it misses just one payment.
Missed payments were one of the issues that sparked the row, and Gazprom says Ukraine still owes it $600m in fines.
"There is no reason to believe that the situation with payments will improve after a significant price rise," Gazprom's chief Alexei Miller warned.
Nevertheless, Russian Prime Minister Vladimir Putin expressed hope that the compromise between the two countries "will allow us to build long-term, reliable and stable relations" with Ukraine and Europe.
  
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