Through the evening of 13 December the price discussed for Ukraine was $160 per 1,000 cubic meters. That evening Alexander Medvedev, GASPROM's vice president, said that if the contract will be unsigned by 1 January, Russia will turn off supplies to the Ukraine. The next morning, 14 December, Sergey Kupriyanov, GASPROM's spokesman, said that the situation has been changed and the new price is going to be $220-$230. It was the obvious step to kill all negotiations. Why did this happened? Because on 12 December Gerhard Schroeder, the former German's Chancellor accepted the top position in the new concern to build the North European Pipeline and it caused a major public scandal in Germany. On 15 December the Bundestag, the German parliament, scheduled hearings on this issue. Russians attempted to bring negotiations to an end in order to demonstrate the significance of the pipeline project (by pointing to Ukraine's gas-stealing), and justifying Schroeder's involvement. And they succeeded: the scandal around Schroeder calmed down...
Next, Russians understood that if brought to court or even to public hearings, their accusations of Ukraine stealing gas would be lost. On 4 January, the EU was supposed to discuss the situation of gas supply in Brussels - so at about 6 AM (!) on that date the contract between GAZPROM and UKRNAFTA was signed and announced at 10 AM Moscow time, before beginning of the workday in Central Europe... And here's how Russia tried to save face: they announced that Ukraine will buy Russian gas at $230 per 1,000 cubic meters, but will get it in reality for $95 because Russian gas will be mixed with cheaper Turkmenian gas!
They probably believe that no one could calculate... Let me share a couple of numbers with you. In 2006 Ukraine will get 40 billion cub.m from Turkmenistan and 16.5 cub.m from Russia. Turkmenia sells its gas to Ukraine at $65 per 1,000 cub.m. This means that Russia sells its gas to Ukraine for $165 to achieve the average price of $95 - this is exactly what was discussed and agreed before 14 December!!! And this is why Ukraine has signed this contract plus the transportation cost was increased from $1.09 to $1.60 for 1,000 cub.m on 100 km, so Ukraine agreed to the deal.
Almost right. 40 bill. cub. m from Turkmenistan is NOT at $65 but at $95 (because of the transit through Kazakhstan and Russia). The price of $95 under the new agreement is what Ukraine pays at its border.