Ukraine and Russia have secured a deal to manufacture natural gas reserves in Ukraine and have made progress on gas price agreement talks for 2006, said Ukraine's premier on Wednesday.

The new leader of the pro-Russian Party of Regions, Viktor Yanukovych was speaking after talks with his Russian equivalent, Mikhail Fradkov at the Black Sea resort in Sochi while on a two-day visit to Russia.

In a televised statement, Yanukovych confirmed that agreements had been reached to improve the underground storage of Ukraine's natural reserves by 24.5 billion cubic meters.

About 130 million cubic meters of gas will be pumped into Ukrainian storage facilities daily, Yanukovych said.

The agreement results from an earlier statement made in June by Russia's gas giant, Gazprom which warned Ukraine of its insufficient gas storage facilities which could possibly cause a gas shortage in the upcoming winter. This could also lead to supplies which are due to be sent to Western Europe. Ukraine receives most of its gas supplies from Russia.

Concern over Ukrainian gas storage was first raised in January this year as the country experienced a harsh winter, causing temperatures to drop to record lows.

Russia and Ukraine had a disagreement over gas supplies late last year, when Russia cut off gas to Ukraine over a price dispute. This cutoff also resulted in gas reductions to a number of EU countries, including Poland and Hungary.

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