Russian President Vladimir Putin said the country's multi-billion dollar investment would go toward bailing out Ukraine to save it from economic collapse.
Ukraine's President Viktor Yanukovych said the bailout deal was necessary. As part of the agreement, Russia state-owned gas utility OAO Gazprom will lower gas prices by 30 percent for Ukraine from $410 to $268.50 per thousand cubic meters, according to the Los Angeles Times.
Russia has the world's biggest natural gas reserves, according to the U.S. Energy Information Agency. The country is the second largest producer of dry natural gas and the third largest for liquid fuels.
"With this cash, we can say Ukraine is effectively rescued until the beginning of 2015, buying time and offering [President] Viktor Yanukovych at least a chance to be re-elected," said Andre Andrijanovs, strategist at investment bank Exotix, according to The Wall Street Journal. "Bondholders are happy but we don't know yet what Russia will want in exchange."