Ukraine, Russia ink deals on gas, Black Sea Fleet

09:23, April 22, 2010      

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Russian President Dmitry Medvedev (L) and his Ukrainian counterpart Viktor Yanukovych shake hands after signing documents in the eastern Ukrainian city Kharkiv April 21, 2010. The two countries agreed Wednesday to extend Russia's Black Sea Fleet stay in Ukraine beyond 2017 expiry date. (Xinhua/Andrey Mosienko)

Ukrainian President Viktor Yanukovych and his Russian counterpart, Dmitry Medvedev, signed deals on gas prices, Black Sea Fleet in the eastern Ukrainian city Kharkiv on Wednesday.

Russia agreed to give Ukraine a significant discount on the price of imported gas in exchange for an extension of the right to base its Black Sea Fleet on Ukrainian territory.

According to the agreement, Ukraine will receive a discount of 100 U.S. dollars per 1,000 cubic meters on natural gas, if the price is not below 330 dollars. But if the price goes below 330 dollars, the discount will stand at 30 percent.

In return, Ukraine will prolong the lease of Russia's Black Sea Fleet on its Crimean peninsula by 25 years, with the option to extend the lease for five more years after the new term expires.

Ukraine's previous president, Viktor Yushchenko, had struggled to kick the fleet out when its lease expired in 2017, stressing that its presence on Ukrainian territory violates the country's constitution.

Wednesday's accords sent strong positive signals to the warming relations between the two countries since Yanukovych took office in February.

However, the commitment to prolong the fleet's lease sparked sharp criticism from Ukraine's political opposition.

Yulia Tymoshenko, a main opposition leader, accused Yanukovych of betraying national interests.

But Yanukovych defended the deals, saying that Ukrainian security would be safeguarded by the presence of the Russian navy.

"We consider this issue in the context of forming a system of collective European security," Yanukovych said. "We understand that the Black Sea Fleet will be a guarantor of security."

The new gas deal, which was signed by Russian gas company Gazprom and Ukraine's state energy firm Naftogaz and the lower export duty will be applied for 30 billion cubic meters in 2010 and 40 billion in the following years until 2019.

At the same day, Russian gas company Gazprom said in a statement that it has lifted all penalties for the failure to buy as much gas as contracted and adding that the discounts for Ukraine "will not harm Gazprom's financials."

The cut in gas prices will help Ukraine's new government trim budget deficit for this year in order to unlock new lending from the International Monetary Fund (IMF).

Medvedev arrived in Kharkiv on Wednesday for one-day visit to Ukraine. This is the fifth meet between the two presidents after Yanukovych's inauguration on Feb. 25.

Source: Xinhua


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