Russia and Oil Gas Deal

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November 3, 2014

    In the final days of October, Russia and Ukraine struck a new gas deal.  After incurring billions of dollars of debt, Russia stopped supplying Ukraine with gas last June.  In the new arrangement, Ukraine agreed to pay $1.45 billion up front to repay their debt and then an additional $1.65 billion by the end of 2014.  Russia has agreed to drop the “take-or-pay” section of their gas agreements, which forced Ukraine to buy a certain amount of gas or pay a penalty.  Russia will also remove their export tax, which will lower the price of gas.
The $4.6 billion deal will last until March 2015.  The European Commission Vice President Günther H. Oettinger stated that this deal will make sure that Ukraine will have the gas supplies they need for the winter.  Additionally, he stated the agreement is “a contribution to the de-escalation between Russia and Ukraine."

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