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Vladimir Putin said he is convinced that it is necessary to base the two countries' gas relations exclusively on market principles. Only cooperating within a market-based regime will permit normal good relations between our countries in the future.

The President of Russia offered Naftogaz of Ukraine a loan with as favourable a rate as possible to cover expenses connected with the transition to a market-based regime for gas payments. The loan will be guaranteed by American or European international banks. The volume of credit on offer is 3,6 billion dollars.

This measure requires modifying the Russian budget. Finance Minister Aleksei Kudrin assured the President that his department will provide this credit.

The Russian head of state expressed his dissatisfaction with the fact that Russian and Ukrainian gas companies could not reach an agreement on the volumes and prices of gas deliveries to Ukraine. Vladimir Putin pointed out that 'you have created a real crisis, and not only in the energy sector. This crisis resembles a crisis between countries. This is very bad.'

The Russian leader agreed with President of Ukraine Viktor Yushchenko on the necessity of depoliticizing the gas issue as much as possible. Vladimir Putin considers that Russia and Ukraine should never put each other in a difficult situation. Russia should give Ukrainian partners the possibility of developing a budget that would enable them to adapt to a market-based regime.

From his side, head of Naftogaz of Ukraine Aleksei Ivchenko assured Vladimir Putin that Naftogaz will rigorously fulfil the conditions of the contract with Gazprom concerning the transit of Russian gas to Europe.

Finance Minister Aleksei Kudrin, Industry and Energy Minister Viktor Khristenko, Deputy Chairman of Gazprom's Board of Directors Aleksandr Medvedev, Ukrainian Energy Minister Ivan Plachkov and head of Naftogaz of Ukraine Aleksei Ivchenko participated in the meeting.