Naftogaz, Ukraine’s state-owned gas company, has said it received $2.9 billion from Russia’s Gazprom to settle a legal fight, part of a larger deal the two companies reached earlier this month.



Naftogaz and Gazprom on December 21 said they reached an agreement on a five-year contract starting January 1 to ship Russian gas to Europe through Ukraine’s pipelines.



As part of that deal, Gazprom agreed to pay $2.9 billion awarded to Naftogaz in 2017 by a Stockholm arbitration ruling. Naftogaz, in return, agreed to drop another lawsuit it filed earlier this year in Stockholm seeking nearly $12 billion in compensation from Gazprom.



"Naftogaz confirms receipt of $2.9 bn outstanding compensation from Gazprom," the company said in a tweet on December 27.

The deal, reached just days before the existing contract expired, erased growing concerns about another gas cut off at the start of the year. Russia twice cut off gas to Ukraine amid disputes over pricing.



The two companies are expected to sign the five-year agreement before the end of the year.