According to Naftogaz, after three days of talks in the Turkmen capital, Ashgabat, the two sides signed an agreement on bilateral settlements on natural gas shipments to Ukraine in 2003-05.
Under the agreement, the $88.34 million pre-payment that Ukraine made for 2006 gas deliveries will be counted toward its 2003-05 gas debt to Turkmenistan, thereby clearing the hard currency part of the Ukrainian company's debt and recognizing a $68 million commodities debt that it pledged to discharge before August 10, 2006.
The agreement also said that in the second half of 2006, Ashgabat will supply natural gas "at prices acceptable to Ukraine."
Under an intergovernmental agreement last year, the Central Asian republic was to deliver 40 billion cu m of gas to Ukraine at $50 per 1000 cu m in the first half of 2006 and at $60 per 1000 cu m in the second half.
Turkmenistan said earlier that Ukraine's debt stood at $158.9 million, and President Saparmurat Niyazov urged Ukraine to pay up.
Ukrainian Fuel and Energy Minister Ivan Plachkov previously said Ukraine had no gas debt to Turkmenistan, and the country's prime minister accused Turkmenistan of delaying bilateral settlements on natural gas supplies.
Plachkov said there was a difference between obligations and debt, and that Ukraine paid $88 million as prepayment in January to Turkmenistan for natural gas as part of its obligations.
Turkmenistan threatened to cut off supplies unless the Ukrainian side cleared the outstanding debt.
Turkmenistan became Ukraine's principal supplier of natural gas after Kiev signed an agreement with Ashgabat to increase Turkmen gas supplies, buying less from Russia.