Moscow- The Kremlin-controlled Russian gas firm Gazprom announced Friday it was to reduce gas prices to Europe.

This year the average price paid by European energy firms will go from 409 to 280 dollars per 1,000 cubic meters, according to the Interfax news agency, citing a company official.

Gas prices are closely tied to the oil price, which since last summer has plummeted by almost three-quarters to around 40 dollars a barrel.

Friday's announcement by Gazprom came as European Commission President Jose Manuel Barroso opened talks in Moscow with Prime Minister Vladimir Putin and President Dmitry Medvedev expected to be dominated by the recent spat over gas supplies to eastern Europe.

Gazprom also said it will reduce its exports to Europe by around 5 per cent to 179 billion cubic meters due to an anticipated decline in demand.

The state-monopoly will also this year reduce its gas extraction by around 7 per cent to an anticipated 510 billion cubic meters.

A two-week suspension of service in gas exports from Russia to Ukraine in January led to shortages across eastern Europe and shook confidence in the reliability of both countries. (dpa)