Jan. 10 (Bloomberg) -- Russia and the European Union signed an accord on monitoring the transit of Russian gas via Ukraine, setting the stage for the full resumption of fuel supplies to Europe after four days of disruption amid freezing temperatures.

Czech Prime Minister Mirek Topolanek, who represents the EU, met with Russian Prime Minister Vladimir Putin after holding talks with Ukrainian leaders yesterday and was due to return to Kiev today to secure their approval, Russian state broadcaster Vesti-24 said.

The gas shutdown, triggered by Russia’s dispute with Ukraine over prices and debt, renewed calls in Europe to develop nuclear power and alternative sources of energy. Fuel supplies are dwindling as temperatures as low as minus 15 degrees Celsius (5 degrees Fahrenheit) in the Balkans spur energy demand.

“In some eastern European countries people are sitting there without heating,” said Bernhard Jeggle, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart. “They’re in a pretty tough situation, but that should be over soon. There will have to be a signature on the deal.”

Russia, Ukraine and the EU struck an accord in principle Jan. 8 on monitoring flows of the fuel, paving the way for the resumption of deliveries to the 27-nation bloc. Since then the deal has been held up by disputes on how to deploy monitors.

Shuttle Diplomacy

Today’s accord was signed by Russian Deputy Prime Minister Igor Sechin, OAO Gazprom Chief Executive Officer Alexei Miller and Czech Trade Minister Martin Riman, Vesti reported.

Earlier today Topolanek said the Ukrainian leadership gave him verbal assurances that Russian experts will be allowed to monitor transit shipments in Ukraine, according to Vesti. At the same time, international monitors will check flows into the Ukrainian pipeline network from Russian territory, he said.

Topolanek will return to Kiev today to secure Ukraine’s signature on the document, and has a meeting scheduled with Prime Minister Yulia Timoshenko at 8:30 p.m. local time.

His role as EU mediator is reminiscent of French President Nicolas Sarkozy’s shuttle diplomacy between Moscow and Tbilisi during Russia’s invasion of Georgia in August. France, which held the EU presidency at the time, was instrumental in ending the five-day war.

Gas Prices

Ukraine and Georgia, both former Soviet republics, have strained relations with Russia in their efforts to join the European Union and the North Atlantic Treaty Organization.

Natural-gas prices in the U.K., Europe’s largest market, initially fell this week on speculation gas could soon be flowing again through Ukraine after EU officials brokered a deal. Gazprom halted transit flows on Jan. 7 after accusing Ukraine of diverting gas intended for other buyers for its own use, a charge denied by the country. Russian supplies to Ukraine itself were suspended Jan. 1 pending a new contract.

The first EU monitors of a group of 22 arrived in Kiev yesterday. David Stulik, an EU spokesman in Ukraine, said the team will consist of 18 experts from Europe’s main gas companies and four European Commission officials.

“As soon as the document is signed and the commission’s representatives begin work at Ukrainian and Russian gas measuring stations, transit will become possible,” Miller told reporters in Sochi, Russia yesterday. Gazprom spokesman Sergei Kupriyanov said that until the protocol was signed by all sides, “these specialists do not have the status of observers.”

European Supplies

Once Russia restarts shipments, it will take up to three days for Russian gas to reach European consumers, the EU said. Supplies to at least 20 nations have been affected.

Gazprom’s European customers receive 80 percent of supplies through pipelines that cross Ukraine. The Russian exporter, which provides a quarter of Europe’s gas, said its overall deliveries to Europe were cut by about 60 percent on Jan. 7.

Bulgaria, Hungary and Slovakia were among eastern European countries that maintained curbs on gas use yesterday. Most countries in western Europe have suffered less from the cutoff, tapping stockpiles and alternative supplies to meet demand.

Temperatures are forecast to fall as low as minus 11 degrees Celsius in Zagreb and minus 15 degrees Celsius in Sofia today, according to AccuWeather.com.

Price Discord

NAK Naftogaz Ukrainy Chief Executive Officer Oleh Dubina is still in Moscow, the Ukraine utility’s deputy chief executive officer Volodymyr Trikolich said, adding “there is some progress.” Dubina flew to Russia Thursday with Miller after EU talks in Brussels.

Miller said yesterday that while talks had resumed, “there is an impression that the Ukrainian participants don’t have any mandate, any authority” to discuss price levels for 2009 or volumes of gas purchases. “We don’t see any readiness of Ukrainian participants in talks for signing the contract,” he told Russian President Dmitry Medvedev yesterday.

The dispute has come as Ukraine’s leaders, Timoshenko and President Viktor Yushchenko, are facing a financial crisis that has forced them to seek a $16.4 billion International Monetary Fund bailout.

Neil Shearing, an emerging-markets economist at Capital Economics Ltd., said yesterday higher gas prices could deepen the country’s recession. “Given that gross domestic product is already set to contract by more than 5 percent this year, the implications for the real economy would be catastrophic.”

Energy Alternatives

In 2006, Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the EU, and also cut shipments by 50 percent last March during a debt spat.

“Europe has seen its dependence on Russia,” Stephan Thomas, a fund manager at Frankfurt Trust Investment GmbH, said yesterday. “It highlights our need of a pipeline through the Baltic Sea to diversify our supplies.”

Slovak Economy Minister Lubomir Jahnatek said the government may review reconnecting a nuclear rector shut down last year to offset a loss of generating power by gas-fired stations. Slovakia 10 days ago shut down the Soviet-design reactor in Jaslovske Bohunice, whose closure by 2008 was one condition for the former communist country to join the EU.

The Polish government will also decide next week on building nuclear power plants in Poland, according to Tomasz Misiak, a member of Poland’s ruling party Citizens’ Platform and chairman of Senate’s economy committee.

To contact the reporters on this story: Maria Ermakova in Moscow at mermakova@bloomberg.net. Kateryna Choursina in Kiev at kchoursina@bloomberg.net

Last Updated: January 10, 2009 11:05 EST