By Jonathan Davies

Russia has agreed to supply gas to Ukraine again, after a deal was struck by the European Union (EU).

It means gas supply to the rest of the EU is ensured via Ukraine. Last week, the National Grid warned that the chances of the UK suffering from power cuts this winter was higher than it has been for several years.

"There is now no reason for people in Europe to stay cold this winter,'' said European Commission President Jose Manuel Barroso.

"This is an important step for our shared energy security in the European continent," Mr Barroso said.

European Union energy chief Guenther Oettinger said he believes Ukraine will be able to pay for the gas. And suggested it was the first "glimmer" of easing tensions between the two countries.

The deal is worth $4.6bn (£2.87bn) and sees the EU sign-up as guarantor if Ukraine is unable to pay. The package includes funding from the EU and International Monetary Fund (IMF).

"Unprecedented levels of EU aid will be disbursed in a timely manner, and the International Monetary Fund has reassured Ukraine that it can use all financial means at its disposal to pay for gas," the EC said in a statement.

"Further work with the international financial institutions on financial assistance to Ukraine, also in relation to gas supplies, will still continue. But all three sides are reassured that Ukraine will have the necessary financial means."

Following the conflict in the eastern Ukraine, Russia cut subsidies on Ukraine importing gas which meant prices rose sharply. Ukraine was unable to pay for the gas, running up huge debts and Russia pulled the plug on its supply.

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