Russia, Ukraine reach temporary gas deal

Russia – locked in a bitter standoff with Ukraine over a pro-Russian rebellion in Ukraine’s east – has agreed to resume natural gas deliveries to its neighbor, in a deal brokered by the European Commission.

The agreement, announced Thursday in Brussels, sets a price of $385 per thousand cubic meters for the duration of the contract, and blunts the threat of severe gas shortages in energy-dependent Ukraine as the predictably harsh Eurasian winter approaches.

The deal, which requires Kyiv to make monthly payments in advance of delivery, is set to expire in March 2015.

Russia cut off gas supplies in June over what it said were Kyiv’s payment arrears of about $5 billion.  The debt has since been reduced to $3.1 billion, which officials say will be paid in two installments by the end of the year.

Moscow had demanded prepayment to restart winter gas supplies, while Kyiv has said it was seeking to raise more money internationally to pay the arrears.

The European Commission is considering Ukraine’s recent request for a new EU loan of about $2.5 billion.