Russia cuts Ukraine's natural gas supply

MOSCOW, Jan. 1 (UPI) -- Russian energy giant Gazprom cut off Ukraine's natural gas supply Thursday when talks about a 2009 energy contract failed, the company said.

Gas deliveries were reduced by 90 million cubic meters per day, the equivalent of a day's supply of gas for the country, The New York Times reported.

But, Gazprom also said it increased deliveries to other European countries by 20 million cubic meters a day, RIA Novosti reported.

The Czech Republic, the European Union and the European Commission urged the parties to honor "all existing commitments," to keep supplies for Western Europe flowing.

Russian Prime Minister Vladimir Putin warned Ukraine of "serious consequences," if Ukraine siphoned off of the gas that travels through Ukraine to Western Europe.

Gazprom is insisting Ukraine pay $600 million in late fees to complete payment on its gas bill.

Ukraine President Viktor Yushchenko said the bill had been settled after Ukraine transferred $1.5 billion to Swiss gas trader RosUkrEnergo.

In 2006, Russian cut off Ukraine's supply for three days, leading to shortages as far away as Italy, as Ukraine diverted gas from the pipeline to meet internal demand, the Times said.

This year, Ukraine said it had three month's supply on hand.