Russia is to cut off gas supplies to Ukraine as a payment deadline passed and negotiators failed to reach a deal on prices and unpaid bills.
Supplier Gazprom said that since Ukraine had paid nothing for the gas, Moscow has no legal grounds to supply it to Ukraine any more.
Spokesman Sergei Kupriyanov said: “Gazprom supplies to Ukraine only the amount that has been paid for, and the amount that has been paid for is zero.
He added that the supply to Europe will continue as planned and Ukraine has an obligation to make sure gas reaches European customers.
But Gazprom said in a statement that it had notified the European Commission of “a possible disruption in the gas transit” in case Ukraine decides to siphon off the gas.
Cash-strapped Ukraine has been chronically behind on payments for the gas needed to heat homes and fuel its industries.
Gazprom offered the previous president, Viktor Yanukovych, a discounted price of $268.50 (£158) per thousand cubic metres after he backed out of an economic and political agreement with the European Union opposed by Russian president Vladimir Putin.
That price was cancelled on April 1 and raised to $485 per thousand cubic metres (£285). Russia has now offered $385 (£226), but Ukraine insists on the old discounted price.
Gazprom has tolerated the late payments but now says Ukraine owes $4.458billion (£2.6billion) for gas from last year and this year.
Russian wanted a payment of $1.95billion (£1.15billion) for past due bills by 9am Kiev time today. As the deadline passed, Gazprom issued a statement that it would start demanding payment in advance for gas.
Ukraine’s overall debt to Gazprom is $4.5billion (£2.65billion), the company said today.
The European Commission said in a statement that Ukraine was ready to accept a compromise in talks in Kiev of paying one billion dollars now and more later, but Russia was not.
European Union energy official Gunther Oettinger said he was “not pessimistic” that agreement could eventually be reached.
Russian deputy prime minister Arkady Dvorkovich said the decision on what to do next in relation to Ukraine will be taken following a meeting between Gazprom chief executive Alexei Miller and Mr Putin.
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