Russian gas giant Gazprom said on Friday it would cut its supplies to ex-Soviet neighbor Ukraine by 25 percent from tomorrow in the latest twist to a long-running dispute over debt payments.
The decision was taken after two days of talks between the two countries ended in failure, Gazprom spokesman Sergei Kupriyanov said in a statement.
"Considering that the situation has reached a dead end, to guarantee its own economic interests, Gazprom will reduce its gas supplies to Ukrainian consumers by 25 percent on March 3 at 10am [7am GMT]," Kupriyanov said.
The European Commission and Gazprom's European partners, which receive a large part of their supplies though Ukraine's pipelines from Russia, have been informed of the situation, he added.
Kupriyanov later told the Interfax news agency that Gazprom was ready to continue talks with Naftogaz Ukraine, but was unsure if the Ukrainian side would agree to negotiate.
The dispute is over 1.9 billion cubic meters of gas deliveries worth about US$600 million that Ukraine has not paid, Kupriyanov said.
Although Ukraine claims to have settled its debts for last year, disagreements remain over a debt Moscow claims Ukraine accumulated in recent months when Russia used its own gas to make up for a shortfall in less expensive Central Asian gas.
Russian natural gas accounts for around a quarter of Ukraine's gas imports, with the rest coming from former Soviet republics in Central Asia via pipelines that go through Russia.
In Friday's statement, Kupriyanov complained that the "informal use of gas is continuing this year." Gazprom earlier complained that no documents had been signed for the gas provided to replace the Central Asian shortfall.
Kupriyanov also complained that Ukraine had failed to sign new deal to coordinate the two countries' gas relations.
Earlier this month, Russian President Vladimir Putin and his Ukrainian counterpart Viktor Yushchenko brokered an accord which had appeared to end the payment dispute. Under the deal, Moscow agreed to a Ukrainian demand to replace two controversial intermediary gas trading companies with a more transparent firm.
Changes to the murky system of intermediaries by which Ukraine pays for gas imported from Russia and Central Asia had been a key demand by Ukrainian Prime Minister Yulia Tymoshenko.
The dispute echoes a price row that led to a brief cut-off of Russian gas to Ukraine in 2006, which led to supply shortages in the EU.
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