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Price increase gets gas flowing

RUSSIAN natural gas began flowing into Europe yesterday after a nearly two-week cutoff that left large parts of the continent shivering and underscored its dependence on Russia's energy.

But the higher price Ukraine now has to pay for the Russian gas will further cripple an economy badly hurt by the financial crisis and could set the stage for another gas dispute with Russia. The office of Ukraine's president has already criticized the deal, saying it hurt the nation's interests.

Russia's gas monopoly Gazprom began pumping gas into Ukraine at around 10:30am Moscow time, spokesman Boris Sapozhnikov said by phone from the Sudzha metering station on the border with Ukraine. Ukraine's Naftogaz state gas company confirmed gas flowed through Sudzha, Pisarevka and other gas metering stations on the border.

Several hours later, Slovak Economics Minister Lubomir Jahnatek said his country started receiving gas. It could take longer to reach other customers.

Russia halted the supplies on January 7 as it argued with Ukraine over 2009 gas prices and allegations that Ukraine was stealing gas destined for Europe.

The new agreement, brokered by Russia's Prime Minister Vladimir Putin and his Ukrainian counterpart Yulia Tymoshenko, calls for Ukraine to receive gas at a 20-percent discount from this year's average European price, which Russia says is US$450 per 1,000 cubic meters.

Gazprom said Ukraine will pay US$360 per 1,000 cubic meters of Russian gas in the first quarter - compared with last year's US$179.5.


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