Following Naftogaz Ukrainy’s refusal to seal a gas supply contract over 2006, Gazprom has suspended today, starting 10am Moscow time, gas shipments to Ukrainian consumers, with an official notice forwarded to the Ukrainian side on 31 December 2005.

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On 31 December 2005 Gazprom made the Ukrainian side a proposal to retain the terms & conditions for Russian natural gas supply to and transit via Ukraine over the first quarter of 2006 at the previous year’s level (in 2005 the gas price and transit tariff stood at US $50 per 1,000 m? and US $1.09 per 1,000m?/100km), with the amount of gas to be shipped fully meeting Ukraine’s requirements. A gas price scheme fixing European rates for gas supply and transit would have been introduced starting from the second quarter of 2006. The contracts signed by Gazprom were officially sent to the Ukrainian side. Ukraine however rejected those unprecedentedly favorable terms.