MOSCOW - Russia's state gas monopoly Gazprom said it will cut off all gas supplies to Ukraine on Thursday morning after the two sides failed to reach a deal.
Gazprom CEO Alexei Miller said the decision was made after Wednesday's talks ended with no agreement on how much Ukraine will pay for natural gas shipments in 2009.
He also said Gazprom has not yet received the $1.5 billion that Ukraine said it transferred to cover its debt, an amount that still falls short of the $2.1 billion that Gazprom says Ukraine owes for gas supplies.
"Gazprom will completely stop supplying gas to Ukrainian consumers at 10 a.m. (2 a.m. EST) on Jan. 1.," Miller told reporters. "All responsibility for the situation rests on the Ukrainian side."
Gazprom had warned it would cut supplies if Ukraine failed to pay off all of its debt and sign a deal for next year's deliveries by midnight.
A cutoff has raised fears of disruptions in supplies to Europe similar to those that occurred during a similar dispute in January 2006.
Gazprom supplies a quarter of the gas used by EU nations, and about 80 per cent of it goes through Ukraine.
Miller said Gazprom will do its best to make sure European consumers receive their gas on time.
Gazprom had insisted that Ukraine pay $418 per 1,000 cubic meters of gas next year, more than double what it paid in 2008.
But on Wednesday, Gazprom offered a contract with gas set at $250, which Ukrainian officials said was still too high.
