Russia signs gas deal with EU

By Mark John and Yuri Kulikov

MOSCOW/KIEV (Reuters) - Russia and the European Union signed an accord on Saturday aimed at restoring Russian gas supplies via Ukraine, whose cut-off has plunged large parts of Europe into a midwinter energy crisis.

Czech Prime Minister Mirek Topolanek, representing the EU presidency, then flew to Kiev hoping to persuade Ukraine to sign the deal, which would allow EU, Ukrainian and Russian observers to monitor the gas flows across Ukrainian territory.

The agreement would assuage Russian fears that Ukraine is siphoning off fuel for its own use. Kiev denies the charge.

"As soon as the mechanism of control starts working, we will send the gas to the system. If we see that it is stolen again, we will again cut flows," Russian Prime Minister Vladimir Putin said after five hours of talks with Topolanek in Moscow.

The dispute, which began when Russia and Ukraine could not agree on this year's gas prices, has led to the worst ever disruption of Russian gas supplies to Europe.

The continent relies on Russia for a quarter of its supplies. Eighty percent of Russian gas to Europe is piped through Ukraine.

Eastern and central Europe have borne the brunt of the dispute, which has shut down factories and left tens of thousands of households shivering in sub-zero temperatures without gas heating. Supplies to 18 countries have been disrupted.

Despite clearing the deal on Saturday, Putin showed no sign of easing his tough rhetoric on Ukraine.