Gazprom CEO Alexei Miller and Naftogaz Ukrainy CEO Oleh Dubyna reached an agreement on this volume of gas supplies during talks in Moscow on Tuesday. The companies have yet to agree on a price for the gas supplies.

"The parties achieved significant progress in endorsing a long-term contract for gas supplies to Ukraine and a contract for its transit via the country's territory. In particular, there is a general approach to pricing gas for Ukraine in 2009 and talks on this issue are expected to be completed in the near future," Gazprom said in a press release.

Implementation of the provisions in the memorandum signed on October 2 was discussed at the meeting.

One key provision is a switch to direct long-term relations between Gazprom and Naftogaz Ukrainy beginning January 1, 2009. The document also provides for the phased transition to market, economically justified and mutually agreeable price of gas for Ukraine and charges for transit through Ukraine over a three-year period.

Relations between the two companies are currently governed by the agreement on development of relations in the gas area signed in March 2008. It stipulates delivery of at least 55 bcm of gas from Central Asian producers to Ukraine in 2008 at a price of $179.5 per 1,000 cubic meters. Naftogaz Ukrainy buys the gas at the border from Switzerland-registered RosUkrEnergo, in which Gazprom has a 50% stake.

Under an agreement signed on May 1, 2008, Gazprom can deliver 7.5 bcm directly to Ukrainian industrial customers via a wholly owned subsidiary, Gazprom Retail Ukraine LLC.