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Ukraine has paid over $1 billion to Gazprom to clear
Ukraine has paid over $1 billion to Gazprom to clear its debts for Russian gas supplies in 2007, the country's First Deputy Prime Minister Oleksandr Turchinov said on Wednesday.

The presidents of Russia and Ukraine agreed on a roadmap two weeks ago to settle Kiev's overall $1.5 billion debt for Russian gas supplies in 2007 and 2008.

"Ukraine's debt as of January 1, 2008 has been paid off," Turchinov told a Cabinet meeting.

Ukraine's national oil and gas company Naftogaz has transferred the payment to the import monopoly UkrGazEnergo, its joint venture with Swiss RosUkrEnergo, which holds a monopoly on natural gas exports to Ukraine.

UkrGazEnergo will now transfer the money to RosUkrEnergo, of which Gazprom controls 50%, with the other half controlled by two private individuals.

Gazprom warned on Tuesday that it would reduce natural gas supplies to Ukraine by 25% on March 3 if problems, primarily debts, were not settled.

Ukraine's Prime Minister Yulia Tymoshenko was expected to make an emergency report to Ukrainian President Viktor Yushchenko earlier on Wednesday over Russia's ultimatum, Ukrainian ICTV said.

The latest reports quoted Gazprom spokesman Sergei Kupriyanov as saying that problems with gas supplies to Ukraine would only get worse in 2008.

Commenting on reports that Ukraine had paid off its 2007 debts to Gazprom, Kupriyanov said, "Paying off last year's debt is not a great achievement, there is nothing to be proud of. Particularly as problems with gas supplies are only set to get worse in 2008, with all the documentation for Central Asian and Russian gas still requiring signing, which means that unauthorized gas consumption is growing in Ukraine."

Under an agreement reached between Russia's Vladimir Putin and Ukraine's Viktor Yushchenko, Gazprom and Naftogaz are to switch to direct cooperation without intermediaries. To achieve this, two joint ventures will be established.

"We are entering a brand new level of gas contacts between Russia and Ukraine, based on principles of direct cooperation which will be mutually advantageous for both parties," Kupriyanov said.

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