Gas War

Russia Halts Natural Gas Sales to Ukraine

On Saturday, Russian President Vladimir Putin said Ukraine could continue
paying the old price of $50 per 1,000 cubic meters for the first quarter of
2006, but only if Ukraine agreed by the end of the day to start paying the new
price of $230 in the second quarter.

Gazprom has said the price increase is necessary to conform to world gas
price levels.

Ukraine has not objected to a market price but wants the increase to be
phased in. Yushchenko said late Friday that the most his country could pay now
is $80 per 1,000 cubic meters.

My question is how did the current price regime come about?