Under the new agreements that was announced by Putin and Tymoshenko on Sunday, Russia will sell Ukraine gas at a price "based on the European price formula," but will offer a 20-percent discount for 2009. In return, Ukraine agreed not to raise its transit fee for Russian gas supplies to Europe.

The Ukrainian government will announce the exact price of Russian gas for Ukraine according to the formula in one or two days, said Tymoshenko.

Russian Premier Vladimir Putin (Front R) and Ukrainian Prime Minister Yulia Tymoshenko (Front L) attend the signing ceremony in Moscow, capital of Russia, Jan. 19, 2009. [Shen Bohan/Xinhua]

The price, which will be calculated on a quarterly basis, will be 360 U.S. dollars per 1,000 cubic meters in the first quarter of 2009, Interfax cited Ukrainian presidential energy security commissioner Bohdan Sokolovsky.

Such a price, however, will "fall radically" in the second and third quarters thanks to the drop of price in the world energy market, Tymoshenko noted.

Russia cut off gas supplies via Ukraine to Europe on Jan. 7, one week after it halted gas supplies to Ukraine due to failed talks on pricing and terms of transit.

When the gas talks between Moscow and Kiev began in late December, Russia offered a gas price of 250 U.S. dollars per 1,000 cubic meters for Ukraine in 2009 with transit fees for gas to Europe remaining unchanged.

Ukraine rejected Russia's "preferential price," saying it could only afford 201 dollars per 1,000 cubic meters of gas, and instead demanded that transit fees be raised from 1.7 dollars per 1,000 cubic meters per 100 km to more than two dollars.

The talks collapsed and Gazprom shut off gas supplies to Ukraine but offered a new price: the same as European market price of 450 dollars per 1,000 cubic meters in 2009, much higher than the 179.5 U.S. dollars price in 2008.

The state-owned Russian gas monopoly reopened its gas taps to Europe on Jan. 13 under a three-way agreement signed by the European Union, Ukraine and Russia, but no gas has reached Europe.

Moscow accused Kiev of blocking the gas flow, while Ukraine argued that Russia's choice of the gas transit route was technically "unacceptable" as it would require Ukraine to cut domestic consumers out before it could deliver gas to the Balkans.

Russia supplies a quarter of EU's gas needs, with 80 percent of it sent through Ukrainian pipelines.

(Xinhua News Agency January 20, 2009)