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Ukraine's prime minister said on Wednesday a gas supply problem
Ukraine's prime minister said on Wednesday a gas supply problem with Russia had been resolved and thanked Moscow for its understanding over Kiev's importing less natural gas than contracted.

"The system of gas supplies to Ukraine has stabilized completely, and we have tried to pay for the shipments on time and in full," Yulia Tymoshenko said at a meeting with Russian premier Vladimir Putin.

"I also want to thank you for your understanding as we are importing less gas than stipulated in the contract," she said.

Due to the economic downturn, Ukraine has requested Russia's Gazprom to cut gas supplies by 17.5% this year, from 40 to 33 billion cubic meters. Ukraine's national oil and gas company Naftogaz said the country had consumed 2.5 billion cu m of gas in March and 1 billion instead of 2 billion cu m in February.

Under the contract Moscow and Kiev signed in January following a pricing and debt dispute that affected Russia's Europe-bound supplies, Naftogaz is entitled to seek a reduction of up to 20%. The contract covers supplies from 2009 to 2019.

The ex-Soviet state's currency is in free fall and its economy has seen a rapid decline in growth. The IMF is currently studying a Ukrainian bailout request.

The meeting is taking place after fresh tensions in relations over Ukraine's agreement with the EU in late March to modernize its Soviet-era gas pipeline network. Russia, which transits about 80% of its Europe-bound gas via Ukraine, said it was excluded from the talks and briefly suspended inter-governmental contacts.

The Russia business daily Kommersant said on Wednesday that Kiev was set to propose to Moscow a separate agreement to increase Ukraine's pipeline capacity.

"Our cooperation is gaining momentum and the sense of confrontation between us is becoming a thing of the past," said Tymoshenko, whose intervention helped secure a breakthrough in the gas dispute.

Opening the meeting, Putin urged further efforts to preserve traditional Russia-Ukrainian cooperation amid economic problems and growing competition on foreign markets.

He said bilateral trade late last year and early this year had grown considerably, hitting $40 billion, despite the ongoing crisis.

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