Gas from Russia is reaching Europe after a new contract is signed with Ukraine.

Following the contract signed between the Russian and Ukrainian governments on 19 January, gas supplies have returned to Europe.

The agreement was signed by the heads of Russia’s state-run natural gas monopoly Gazprom and Ukraine’s gas company Naftogaz, and witnessed by Russian Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Tymoshenko.

Since the failure to renew the old contract on 1 January, millions of Europeans have been without heat for two weeks, with Ukraine, Hungary, Slovakia and Bulgaria the worst hit by the disruption to supplies.

EU states import a quarter of their gas from Russia and 80% of supplies come via Ukraine. Almost 20 countries in Europe have been affected by the dispute.

The Czech EU Presidency welcomed the resumption of Russian gas deliveries to the citizens of the European Union through Ukraine. A statement said: “We expect Russia and Ukraine to honour their commitments so that full flow of natural gas is not disrupted again.

“The resumption of deliveries is a result of a sustained political pressure of the Czech Presidency and the European Commission, who acted with full support of EU Member States.

“However, this bilateral dispute has harmed the confidence placed into the two countries. To rebuild European consumers’ confidence is now a challenge for both Russia and Ukraine.”

On Tuesday, a spokesman for Russia’s gas company Gazprom, Boris Sapozhnikov, said the gas flow was restarted at around 1030 Moscow time (0730 GMT), after Russia and Ukraine finally agreed prices at which Ukraine would buy Russian gas, and ship it to European customers.

Previously Ukraine has paid a heavily discounted rate, yet Gazprom will now charge the market rate – $360 (£261) per 1,000 cubic metres – but with a 20% discount for the rest of 2009.

Although this compares with the market rate paid by European customers of about £450, Ukraine was until December 2008 paying just $179.50; however the price is expected to drop in line with falling gas prices.