Russian Prime Minister Viktor Zubkov, right, greets Ukraine’s Prime Minister Viktor Yanukovych during their meeting in Moscow on Oct. 9. AP The Oct. 9 deal appears to lessen the possibility that Gazprom will cut gas shipments to Ukraine as it did last year

for gas supplies, seemingly resolving a dispute that has raised concerns of a supply cut in Europe and added to the political uncertainty in Ukraine.

Moscow said Ukraine’s debt totals more than $2 billion in overdue gas bills.

The deal, struck Oct. 9, also appears to lessen the possibility that Gazprom will cut gas shipments to Ukraine, as it did last year when the two countries became embroiled in a gas-pricing dispute, which triggered supply shortages in Europe.

Gazprom said earlier this month that Ukraine owed $1.3 billion, but Russian Prime Minister Viktor Zubkov said Oct. 9 that Ukraine’s debt had climbed to more than $2 billion.

Ukraine would repay $1.2 billion of the debt by transferring gas stored by Swiss-registered RosUkrEnergo in underground facilities in Ukraine to Gazprom’s export arm Gazexport for further export, Zubkov said during a televised meeting with Ukraine’s Prime Minister Viktor Yanukovych in Moscow.

The remaining $929 million is to be paid by the companies that supply gas on the Ukrainian market, he said.

Yanukovych appeared unhappy about his government having to accept responsibility for a debt that had been incurred by Ukrainian companies.

“It [the debt] doesn’t exist as such but we have created a mechanism that will allow us to settle the issue,” he said in response to Zubkov.

Gazprom uses its partners RosUkrEnergo and Ukrainian industry gas supplier Ukrgaz-energo, a Russian-Ukrainian joint venture, to supply gas to Ukraine and resell it to domestic consumers.

Gazprom owns 50 percent of RosUkrEnergo, with two individuals owning the remaining 45 percent and 5 percent stakes in the company, while RosUkrEnergo owns 50 percent of Ukrgaz-energo.

Ukrainian Energy Minister Yuriy Boyko negotiated the Oct. 9 deal and said companies that accumulated the debt would repay it by Nov. 1.

Gazprom had earlier threatened to cut gas supplies to Kyiv if it failed to pay the $1.3 billion debt by Nov. 1.

Gazprom’s threat to reduce gas supplies to Ukraine came as votes were still being counted in Ukraine’s tense parliamentary election and was viewed as a Kremlin attempt to influence the formation of a governing coalition.

Yanukovych, who is seen as Russia-friendly, faces the possibility of losing his post after a strong showing in the Sept. 30 elections by the parties of his rivals, President Viktor Yushchenko and former Prime Minister Yulia Tymoshenko.

Moscow has been shaken by the possibility that a pro-Western Orange government could be formed between the Tymoshenko and Yushchenko forces, raising the specter of a further standoff between Russia and Ukraine.

Another shutdown of gas supplies to Ukraine due to a protracted dispute over gas prices and debts would further weaken Ukraine’s reputation and position at the gas-price negotiating table. Observers say that the latest agreement has significantly boosted Gazprom’s already strong hand in future price talks with Ukraine, whose pipeline system serves as the key artery for Russian supplies to Europe. Around 80 percent of Europe’s Russian gas imports flows through Ukraine.

Volodymyr Omelchenko, an energy analyst with the Kyiv-based Razumkov Center, said the negotiations showed the degree to which the Ukrainian government is dependent on the Kremlin.

“The government recognized a debt that belongs not to the state but to companies,” he said. “This is the biggest shortcoming of these agreements, it is a stain on Ukraine’s reputation,” Omelchenko said.

Meanwhile, both Tymoshenko’s Orange roots and the possibility that she could become Ukraine’s next prime minister are anathema to Moscow and have it worried, all the more because she has pledged to remove shadowy intermediaries from the lucrative gas trade business between Ukraine, Russia and Central Asia.

Tymoshenko confidant Oleksandr Turchynov on Oct. 9 called for an extraordinary session of Ukraine’s National Security and Defense Council to decipher where the gas debts had come from and why they had surged so rapidly.

“Viktor Yanukovych, who campaigned in the 2006 elections with populist slogans promising friendship with Russia and cheap gas from Gazprom, has completely ruined the energy policy [of Ukraine],” Turchynov said.

“It is precisely during Yanukovych’s reign that shadowy intermediaries obtained complete control over the energy market while opponents of Ukraine obtained additional arguments for lobbying the construction of additional pipelines bypassing Ukraine.”

Turchynov investigated the role of intermediary companies in the inter-country gas trading business in the region while serving as head of Ukraine’s State Security Service in 2005. He has dubbed these intermediaries criminal-like structures that “act as parasites,” generating large revenues that could be in state coffers. He and Tymoshenko have repeatedly pledged to weed out the intermediaries by establishing direct deals between Ukraine’s state energy companies and those of Russia and Central Asian countries.