Moscow: Russia's state-owned natural gas monopoly Gazprom has begun shutting down supplies of natural gas to Ukraine, according to the Russian news agency Interfax.
Gazprom said it would begin shutting off Ukraine after Ukrainian officials said they would not sign a new gas price agreement proposed by Russian President Vladimir Putin.
Gazprom, which supplies around one third of Ukraine's natural gas, has increased the price of gas from around $50 per 1000 cubic meters of natural gas to $230 per 1000 cubic meters of gas, a four-fold increase.
Ukrainian officials balked at the price increase, and see the increase as Russia's attempt to penalize the former Soviet republic for its western-leaning foreign policy.
Putin offered a last minute compromise, offering to freeze gas prices at the old level for the first quarter of 2006 if Ukraine agreed to price increases after that.
Gazprom officials said they were told by Ukraine that they would not sign the compromise agreement. That offer expired with the coming of the new year.
Ukraine Gas officials have said that they have enough gas for the immediate future. Ukraine announced last week it had signed an extension of its agreement with Turkmenistan, which supplies about half of Ukraine's natural gas supply.
While a gas supply crisis isn't expected immediately, experts project that Ukraine will run out of natural gas sometime around the summer.
Western Europe is watching the Ukraine-Russia battle anxiously because the same pipelines that take Russia's gas to Ukraine go on to Western Europe, supplying it with more than a quarter of its natural gas needs.
The fear is that there could be a disruption in European gas supplies because of the dispute.
The European Commission will meet this week to discuss contingency plans. The Russians and the Ukrainians, both promise their dispute won't disrupt western Europe's supply.
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