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Russia and Ukraine struck a five-year deal on gas deliveries on Wednesday, three days after Russia cut off the gas supply to Ukraine at the height of a bitter pricing dispute.

Russia's move caused an uproar in Europe as gas supplies fed by a key pipeline through Ukraine dipped severely during what has been one of the coldest weeks of the winter.

Speaking at a press conference, Chairman of Gazprom Alexei Miller said the Russian gas giant and Ukraine's oil and gas company Naftogaz Ukrainy had signed a five-year contract on supplies.

Under a complex price scheme, Gazprom will sell gas for US$230 per 1,000 cubic meters to the Rosukrenergo trading company, which will mix the Russian gas with gas from Central Asian countries Turkmenistan, Kazakhstan and Uzbekistan and sell the blend to Ukraine for US$95 per 1,000 cubic meters.

Ukraine had been buying gas from Russia at US$50 per 1,000cubic meters over the past year.

The two sides also agreed on a new price for transit of gas through Ukraine to Europe of US$1.60 for every 1,000 cubic meters transported 100 km, up by nearly 50 percent from the previous price of US$1.09.

Gazprom provides about half the gas consumed in the European Union (EU) and 80 percent of that amount is sent through pipelines crossing Ukraine.

"The agreements will provide additional security guarantees to gas exports to Europe and serve as a sound foundation for further cooperation between Russia and Ukraine in the gas sector based on market principles," Miller said.

The two countries had been locked in a months-long dispute over gas prices, with Kiev strongly resisting Gazprom's demands that Ukraine pay US$230 per 1,000 cubic meters. Russia cut off gas supply to Ukraine on Sunday blaming the absence of a new deal.

European countries from Slovenia to Germany felt the pinch of Russia's move, reporting shortfalls of gas supplies in freezing weather.

Gas supplies in many affected countries returned to normal levels after Gazprom pumped extra gas into pipelines running through Ukraine. Russia accused Ukraine of stealing gas intended for other European countries, a charge Kiev denied.

The head of Naftogaz Ukrainy, Olexiy Ivchenko, said at the press conference his company is "satisfied with the outcome of our negotiations," which will fully meet Ukraine's gas needs and ensure the transit of Russian gas to Europe.

The 25-member EU convened an emergency session on Wednesday to discuss Europe's energy security.

(Xinhua News Agency January 5, 2006)