Ukraine and Russia are expected to sign a deal over gas supply

Ukraine and Russia are expected to sign a deal to resolve their dispute over natural gas shipments to Europe and Ukraine on 19 January 2009. Once the deal is signed and gas shipments are resumed, it is expected to take up to one and a half days for gas supplies to cross Ukraine and reach Europe. Despite the hope of a resolution, many European leaders are cautious, as previous agreements have fallen through. Although official prices have not been released, reports indicate that Russian Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Tymoshenko have agreed that the price of natural gas delivered to Ukraine in 2009 will be 20 percent lower than the European average. This amount at the current prices is double what Ukraine paid in 2008; however, decreasing European prices could result in a sharp decline by midyear, and the average for the year is expected to be US$240-250 per 1,000 cubic meters. There has been no indication that Russia has agreed to pay higher transit prices to Ukraine, which had previously been demanded.