A 10 year agreement was signed yesterday in the evening between Gazprom and Naftogas in Moscow.

According to the agreement, Ukraine will receive in 2009 a 20% discount to the European market price for gas, and the transit fee will remain unchanged at $1.7/tcm per 100km. Since 2010, Ukraine will pay the European market price for gas, calculated according to the formula, and Russia will pay market price for transit via Ukrainian territory. The gas supply to Ukraine will be carried out without any intermediaries, as it was in the past (RosUkrEnergo).

Currently the final price for Russian gas is being calculated according to the new formula and will be announced in two days. Ms Tymoshenko announced that she expects the price to be in the range $230- $250/tcm in 1Q2009. According to the statement of representative of Ukrainian president Mr. Sokolovsky and Gazprom, the price for Russian gas for Ukraine is expected to be $360/tcm in 1Q2009.

Today at 4:00 MSK Gazprom began to pump gas in the European direction via Ukraine. At 10:00 MSK the gas delivery was resumed in full amount from the side of Gazprom. Naftogas prepares Ukrainian gas transit system to receive 430mn cm/day.

Our view: As soon as the gas delivery to Europe will be resumed completely, the recent gas dispute can be officially announced as resolved.