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Turkmenistan and Ukraine agreed on a new contract for natural gas supplies on Jan. 2, just days after Turkmenistan cut off all gas to the country in a dispute that had threatened Ukraine's economy.The one-year supply deal signed by President Saparmurat Niyazov and the president of national oil and gas company Naftohaz Ukraine sets a price of $58 per 1,000 cubic meters, at a volume of 36 billion cubic meters (1,260 billion cubic feet) for 2005. Ukraine had sought a price closer to $40 per 1,000 cubic meters.



At the signing ceremony in the Turkmen capital Ashgabat, Naftohaz Ukraine president Yuriy Boyko said he was "fully happy" with the new deal, whose price is about 30 percent higher than last year's.



Turkmenistan had proposed higher 2005 gas prices for Russia and Ukraine, blaming the increase on increased production costs and higher costs of gas extraction equipment.



Both nations balked at the higher rates and at midnight on Dec. 31, Turkmenistan turned off supplies to them.



Russia could meet its gas needs on its own, but cheap Turkmen supplies relieve Gazprom of costly investments in natural gas field exploration and development in Siberia. Ukraine, however, gets about 45 percent of its natural gas from Turkmenistan and could have seen some impact on its economy.



Negotiations with Russia were ongoing, Niyazov said. The head of Russia's state-owned natural gas giant Gazprom said last week he expected to fly to Turkmenistan early this month to sign a new contract.



"With the Russian Gazprom, we also are conducting negotiations on supplying gas for 2005 at a price of $58 for 1,000 cubic meters," Niyazov was quoted as saying by Russia's ITAR-Tass news agency. "We can't sell gas from one gas transport system to another at different prices."



Turkmenistan said it planned to export 41 billion cubic meters (1,450 billion cubic feet) of gas to Ukraine and Russia this year. By 2007, its annual exports are expected to reach 100 billion cubic meters (3,530 billion cubic feet).



The country is the second-largest natural gas producer in the former Soviet Union after Russia.



Kyiv Post