Russian, Ukraine agree on natural gas, Black Sea fleet

April 21, 2010 Kiev - The leaders of Russia and Ukraine on Wednesday agreed to overhaul the two countries' energy relations starting with a dramatic cut to natural gas prices in exchange for an extension of Russia's lease of a Ukrainian port for its Black Sea fleet. Russian President Dmitry Medvedev, after meetings with his Ukrainian counterpart Viktor Yanukovych in the east Ukrainian city Kharkiv, announced Russia would slash the fixed price of natural gas sold to Ukraine by 30 per cent. Medvedev made clear that the continued presence of Russia's Black Sea Fleet in the Ukrainian port Sevastopol was a key condition for the gas price reduction. The reduction - once put into effect by the Russian state-owned energy conglomerate Gazprom - would reduce the price paid by Ukraine for the fuel from 330 to 230 dollars per thousand cubic metres, and become the single biggest reduction of natural gas pricing by Moscow since the break-up of the Soviet Union. The move marked a dramatic turnaround to previously thorny energy relations between the two countries. They reached their lowest point in early 2009 when Russia shut off all natural gas supplies to Ukraine in a pricing dispute, causing fuel shortages across Europe.
The extension of a Russian naval lease in Sevastopol, once effective, would be a defeat for NATO strategists, who since the mid 1990s have lobbied a series of Ukrainian government to push Russian naval and air forces out of the Crimean peninsula.
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