Gazprom and Ukraine are to sign a deal today spelling out exact terms for repaying $1.3bn (€910m, £640m) in natural gas arrears owed by Kiev, the Russian state-run gas group said, potentially resolving a standoff that has raised fears of shortfalls in gas supplies to Europe.

Gazprom spokesman Sergei Kupriyanov said the latest round of talks between the gas group and Ukraine's fuel and energy minister Yuriy Boiko yesterday had resulted in "agreement on a scheme to repay the debt".