Russian and Ukrainian leaders have agreed a deal that ends a dispute over a gas debt during talks in the Kremlin today.
A deal was struck just minutes before a Moscow-imposed deadline on Ukraine to pay up or face supply cuts.
"We have agreed that Ukraine will on Thursday start repaying the debt which was amassed in November-December of last year because supply contracts had not been signed by the structures involved," Ukrainian president Viktor Yushchenko said.
"Gazprom is satisfied with proposals made by the Ukrainian side," President Vladimir Putin told the same news conference.
There were fears in Europe that the row could escalate into a repeat of early 2006, when a pricing dispute between Moscow and Kiev disrupted shipments to Europe.
Russia's gas export monopoly Gazprom, which provides a quarter of Europe's gas, had threatened to cut 25 per cent of its supplies to Ukraine at 3 pm today if there was no deal on the debt, which Russia puts at $1.5 billion.
Most Russian gas exports pass across Ukrainian territory, but both countries have assured Europe that westward gas flows will not be interrupted.