Russia says it cannot rule out cuts in its gas supply to Europe following a dispute with Ukraine over unpaid bills.

Russia's energy company Gazprom says that Ukraine's state-owned gas company owes up to $2.4bn. If the debt is not met, supplies destined for Europe that pass through Ukraine will be cut.

Viktor Zubkov, Russia's first deputy prime minister, said on Monday: "It is not ruled out that the current position of the Ukrainian side and some of its actions could lead to disruptions in the stability of gas supplies to Europe."

Several European Union countries had their supply interrupted in the winter of 2006, also due to the Ukraine-Russia dispute. Ukraine is a major transit country for Russian gas exports to the EU.

Zubkov blamed the latest spat on Ukraine's pro-Western leaders who he said had taken an "unconstructive position".

"I want to assure you that Gazprom will, as always, fulfil its contractual obligations before its European clients," he said.

"The responsibility for a worsening critical situation that could have an impact on European gas consumers lies fully with the Ukrainian side and the key to regulating the situation lies with them."

Oleksander Shlapak, an economic aide to Viktor Yushchenko, the Ukrainian president, moved to reassure the EU, saying: "Ukraine is ready to give guarantees of uninterrupted gas supplies in 2009 to European gas consumers."
  
Complex negotiations

Last week Ukraine repaid $1bn of debt to Gazprom for gas pumped in September and October, but Gazprom has said it has no legal obligation to supply gas unless the debt is paid in full. 

The complexity of negotiations is made worse by Gazprom's desire to charge Ukraine a higher price under a new contract. Ukraine is reluctant to agree to the hike in light of the global financial crisis.

Ukraine currently pays Russia about $180 for 1,000 cubic metres of gas. Gazprom says the price could rise to $400 for 1,000 cubic metres from next year.

In Brussels, Ferran Tarradellas, the European Commission spokesman, said any supply cuts would be less disruptive than three years ago, noting that there was no comparison between now and the cold winter of 2005-2006.

"The reservoirs of European gas are 90 per cent full and the level of the Ukrainian reservoirs is also very high," he said.