(MENAFN- Kuwait News Agency (KUNA)) After seven rounds of negotiations between Russia and Ukraine mediated by the EU, Thursday's night's talks resulted in a breakthrough, with Russia and Ukraine agreeing on a USD 4.6 billion winter package to secure gas for Ukraine - and ultimately also for Europe.
Jose Manuel Barroso, President of the European Commission, speaking after the signing of the agreement late last night said "There could not be a better way to end my mandate as President of the European Commission than by announcing a very important agreement between Russia and Ukraine, an agreement to which the European Commission has contributed with very patient and determined effort.
"Ukraine and Russia have today found agreement on their outstanding energy debt issues, and on an interim solution that enables supplies to continue this winter. I am glad that political responsibility, the logic of cooperation and simple economic sense have prevailed," he said.
On his part, EU energy Commissioner Gunther Oettinger said "This breakthrough will not only make sure that Ukraine will have sufficient heating in the dead of the winter. It is also a contribution to the de-escalation between Russia and Ukraine." Aleksandr Novak, Russian Minister for Energy, said that "today we have reached a result and our agreement has been proven by the documents we have just signed." Yuri Prodan, Ukrainian Minister for Energy said "Together with the European Commission we will manage to provide the necessary financing in order to buy the necessary volumes of gas which will provide the security supply of gas to Ukraine and the secure transit of gas to the European Union." The winter package consists of two documents: A binding protocol, signed by the European Commission, Russia and Ukraine and an addendum to the existing gas supply contract, signed by Gazprom of Russia and Naftogaz of Ukraine.
The package covers the period from now until the end of March 2015.
It stipulates that the Ukraine would settle its debts based on a preliminary price of USD 268,500 per 1000 cubic meter by making payments in two tranches; USD 1.45 billion without delay, and USD 1.65 billion by the end of 2014. This adds in total up to USD 3.1 billion of debt payment.
The final price and thus the final sum of debt will be determined through the pending arbitration by the Arbitration Institute of the Stockholm Chamber of Commerce between Gazprom and Naftogaz.
The agreement also stipulates that Russia will deliver gas following advanced, monthly payments by Ukraine, which is free to order as much gas as it needs and is not subject to take-or-pay obligations foreseen in the current contract.
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