Russian energy giant Gazprom and Ukrainian state-owned energy firm Naftogaz reached an agreement Wednesday on construction of the first stretch of a pipeline to carry Russian gas to Europe.
Gazprom chairman Alexei Miller and Naftogaz boss Yuri Boyko signed the agreement, which is part of plans to modernise the Ukrainian gas pipeline network, in the presence of Russian President Vladimir Putin and his Ukrainian counterpart Leonid Kutchma.
The two agreed on the construction of a 165-kilometer (100-mile) pipeline in western Ukraine which are to make up a first stretch of a pipeline 1,500 kilometres in length that will hook up with a network in neighbouring Slovakia.
No date was given for the construction of the pipeline, which will cost around 2.8 billion dollars (2.2 billion euros).
Kiev and Moscow agreed in 2002 to create an international consortium to modernise Ukraine's gas pipelines in order to increase Russian exports to Europe.
In January 2003, Gazprom and Naftogaz formally set up a 50-50 venture.
Germany joined the talks on the project in April 2003 and Kiev has invited France and Italy to participate as well.
However, doubts in the Ukrainian government about the economic and technical viability of the venture has delayed the project.