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Gas flow is monitored in a gas pipeline at Gazprom's compressor station in Sudzha, Russia. Gazprom's chief executive and Ukraine’s minister of fuel and energy met last week to discuss contracts. Image Credit: Bloomberg News

Moscow: Russia and Ukraine reached a natural-gas agreement, based on "suggestions" from Ukrainian President Viktor Yanukovych, Interfax and RIA Novosti said, citing the Russian government press office.

Russian Prime Minister Vladimir Putin ordered his government to draft an agreement with Ukraine, including pricing, the Russian news services said.

The press service confirmed the reports, without elaborating when called by Bloomberg.

Russian President Dmitry Medvedev told reporters in Brasilia, Brazil on Thursday that he planned an "unscheduled" visit with Yanukovych this week, and that gas talks continued.

Ukraine has been seeking a price cut as the current level is "too heavy to lift", said First Deputy Prime Minister Andriy Klyuev on March 21.

The country's economy shrank by 15.1 per cent last year, the deepest decline since 1994, as the financial crisis cut demand for its exports, weakened the currency and dried up investments.

Alexei Miller, the chief executive officer of Gazprom met with Ukraine's Fuel and Energy Minister Yuriy Boyko in Moscow on Friday to discuss contracts, the Russian gas export monopoly said in an emailed statement, without elaborating. Sergei Kupriyanov, a Gazprom spokesman, declined to comment.

Ukrainian Prime Minister Mykola Azarov's spokesman, Vitaliy Lukyanenko, was not able to comment immediately when called by Bloomberg.

NAK Naftogaz Ukrainy, the state-run energy company, also declined to comment.

Yanukovych has suggested setting up a group with Russia and the European Union to manage pipelines that carry 80 per cent of Russia's Europe-bound gas exports.

To do so, the Cabinet that took office last month will have to persuade parliament to overturn legislation forbidding the creation of ventures with foreign countries to run the network and storage sites.

Ukraine planned to offer Russian companies its gas storage facilities for rent and stakes in the Kremenchug refinery and planned nuclear reactors, in exchange for a $4 billion discount on gas purchases this year, Kommersant said Friday.

Ukraine, which relies on Russia for almost 50 per cent of its gas, has struggled with gas prices agreed on last year after a dispute interrupted transit supplies to Europe for two weeks.