Ukraine reports Norway gas deal to counter Russian cut

Ukraine said today it had struck a gas deliveries deal with Norway's energy giant Statoil aimed at helping it avert the consequences of a months-long cut in Russian supplies.

Kiev: Ukraine said today it had struck a gas deliveries deal with Norway's energy giant Statoil aimed at helping it avert the consequences of a months-long cut in Russian supplies.

The announcement represented a continuing drive by Kiev's new pro-Western leaders to tie their economic future to Europe and sever a decades-old dependence on the Kremlin that many Ukrainians feel has shackled their political rights.

But it also threatens to infuriate Moscow and complicate Statoil's effort to become one of the first global majors to access the potentially enormous wealth of untapped Arctic energy fields.

It signed a broad Arctic agreement with Russia's oil powerhouse Rosneft now the target of EU and US sanctions that are meant to punish the Kremlin for its actions in Ukraine in 2012.

The Norwegian deliveries deal's sensitivity was underscored when both Ukraine's state energy holding Naftogaz and Statoil refused to disclose the volumes or price of gas in the contract.

"The agreement marks a significant breakthrough for Naftogaz," chief executive Andriy Kobolev said in a statement.

"We are committed to integrating Ukraine fully into the EU energy market and working with the European Commission and other key actors to do so."

Russia nearly doubled Ukraine's gas price a few weeks after the February ouster in Kiev of a Kremlin-backed president who had earlier rejected a historic EU trade and political association pact.

The Russian state gas giant Gazprom cut deliveries to its western neighbour in mid-June after Kiev refused to pay the higher rate and all European mediation efforts failed.

A new round of EU-mediated talks between Moscow and Kiev failed to resolve the dispute last week and another meeting is still under discussion.

Ukraine has tried to make up some of this year's shortage by boosting purchases from its western neighbours.

But Russia warned last week that it may be forced to interrupt European supplies because of a handful of nations' decision to re-export gas to Ukraine in breach of their Gazprom contracts.

EU officials said the long-term Gazprom agreements allowed the gas to be shipped freely to any interested client.

But Hungary immediately halted its limited shipments to Ukraine -- a decision Gazprom rewarded by boosting the former Soviet satellite's gas supplies.

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