EU concerned as Russia cuts off Ukraine gas

Ukraine rejected a price increase, saying that falling oil prices did not justify the move. Kiev also claimed it has paid its outstanding debt of €1 billion to RosUkrEnergo, the gas-trading intermediary, while Gazprom maintained it had not received the money and also expected €432 million fines for late payment.

The news sparked concern in Brussels and Prague, with both the European Commission and the Czech EU presidency urging Ukraine and Russia to "continue negotiations and rapidly reach a successful outcome so that gas supplies to the EU are not affected." Some 80 percent of EU gas imports from Russia are carried through the same pipeline that supplies Ukraine.

The US also called on both parties to find an agreement in a transparent, commercial manner. "We urge both sides to keep in mind the humanitarian implications of any interruption of gas supply in the winter," said White House spokesman Gordon Johndroe.

Yet the current crisis is less likely to have the same impact as in the first days of January 2006, when EU consumers in Germany, Hungary, Italy and Poland registered shortfalls in shipments after Gazprom turned off the tap to Ukraine.

The Russian monopoly then blamed Ukraine for causing the shortages by syphoning gas, a claim rejected by Kiev.

EU member states and Ukraine itself have in the meantime built up gas storage facilities, with the Ukrainian gas company Naftogaz reassuring that its reserves last until early April.

President Viktor Yushchenko and Prime Minister Iulia Tymoshenko issued a joint statement on Thursday pledging that Ukrainian consumers and European gas supplies would be unaffected by the dispute.

Mr Yushchenko also said on Thursday that a price deal with Gazprom was close and should be reached by 7 January.

On the Russian side, Gazprom was also trying to reassure EU consumers, saying it has increased the amount of gas pumped through the pipeline that serves Europe.

Unlike 2006, when Russia seemed to lose the public relations battle and scared European customers, this time Gazprom has hired an American PR agency, Ketchum, and set up a special website explaining its position, the Wall Street Journal reports.

For his part, Prime Minister Vladimir Putin has also stressed that if disruptions were registered in the EU, it would be solely Ukraine's responsibility and warned of "quite serious consequences for the transit country itself" if it tried to syphon gas from EU deliveries.

It takes 36 hours for gas to get from the transit point in Ukraine to the EU's borders, said European Commission spokeswoman Christiane Hohmann, adding: "That's how long before we know whether the EU will be affected."