Gazprom and Naftogaz Ukrainy have finally settled their standoff surrounding cooperation in the gas sector and agreed to shift over to market rates for natural gas supply and transit.

The parties reached an accord that from 1 January 2006 Gazprom would ship gas to RosUkrEnergo under a price scheme fixing an initial gas price at US $230 per 1,000 cu m. In that regard Gazprom and RosUkrEnergo entered into a pertinent five-year contract.

Given that RosUkrEnergo also possesses gas from Central Asia, starting 1 January 2006 said company will sell gas to Ukraine on the Russian-Ukrainian border at the price accounting for US $95 per 1,000 cu m.

The tariff for Russian gas transmission through Ukraine makes up US $1.6 per 1,000cu m/100km.

Gas supply and transit will be paid up in cash.

At the end of the signing ceremony the parties underscored that the accords achieved were mutually beneficial and opened way towards deeper cooperation between Russia and Ukraine in the gas sector under market-based principles.