Moscow, Kiev agree to reduce gas supplies to Ukraine 35% in 2010

MOSCOW (RIA Novosti) -- Russia’s Gazprom and Ukraine’s Naftogaz agreed on Tuesday to reduce Russian national gas deliveries by 35% in 2010, from the previously contracted 52 billion cubic meters to 33.75 bcm.
The agreement was reached during a meeting between Gazprom’s chief Alexei Miller and Naftogaz’s Oleh Dubyna. Gazprom also agreed not to use sanctions under a “take or pay” provision in the contract, whereby the buyer has to pay for the entire contracted volume. Instead of 40 billion cubic meters of gas, Ukraine will buy less than 25 billion in 2009. But Russia has said it will not fine Kiev for falling short of contracted volumes due to the ex-Soviet state’s difficult economic situation. Russian Prime Minister Vladimir Putin, who met on November 19 in the Ukrainian city of Yalta with his counterpart Yulia Tymoshenko, reiterated that no sanctions will be used against Ukraine. Russia, which supplies around one quarter of Europe’s gas, briefly shut down supplies via Ukraine’s pipeline system at the start of the year amid a dispute unpaid bills and new prices. The conflict was resolved in January, when Putin and Tymoshenko reached a deal on imports and transit for 2009. Ukraine transits around 80% of Russia’s Europe-bound gas.