Meanwhile, European Union envoys discussed expanding the list of Russians who would be subject to visa bans and asset freezes due to involvement in the Ukraine crisis, the Financial Times reported.
Seven Ukrainians, including Rear Adm. Sergey Haiduk, were detained by Crimean authorities Wednesday during the takeover of the Ukrainian naval headquarters in Sevastopol. They were released following an appeal by Russian Defense Minister Sergei Shoigu after he and Ihor Teniuk, Ukraine's interim defense minister, discussed possible steps for diffusing the crisis during a phone conversation.
Because several of the 10 Russian names were too contentious to draw agreement, the diplomats said the decision on sanctions would be left to the bloc's heads of government when they discuss Ukraine at a summit dinner Thursday night in Brussels, the Times said.
Among the most provocative names was a Russian journalist, thought to be Dmitry Kiselev, an on-air personality with Rossiya Segodnya media group who said on Russian television earlier this week Russia was "the world's only country that is ready to turn the USA into radioactive ash."
The Times said several ambassadors objected to the journalist's inclusion because he had no direct involvement in the Crimean incursion while others objected to targeting a journalist.
Leaders of Crimea and Russia have refused to recognize the new government in Kiev that came to power after ousting pro-Russian President Viktor Yanukovych last month. Crimean voters on Sunday overwhelmingly approved a referendum seceding from Ukraine and reuniting with Russia, which sent thousands of troops to the peninsula, despite President Vladimir Putin's denials.
Putin and pro-Russia Crimean leaders signed a treaty Tuesday that would incorporate Crimea and Sevastopol into the Russian Federation. Russia's Constitutional Court approved the document Wednesday.
EU diplomats said there was a consensus among leaders not to advance to "phase three" of their sanctions plan, which includes broad-based economic and trade measures, focusing instead on developing a more detailed list of what could be included in phase three and more clearly defining what would trigger such sanctions, the Times said.
German Chancellor Angela Merkel told the German Parliament Thursday the Group of Eight of the world's wealthiest industralized nations, which includes Russia, was in effect defunct as long as the dispute with Moscow over Ukraine exists.
Russia, which holds the revolving presidency of the G8, was to have hosted a summit in Sochi in June. Responding to Russia's intervention in Crimea, the Group of Seven (the G8 minus Russia) suspended preparations for the Sochi summit and one member said Russia would be kicked out of the organization.
"As long as the political environment is not in place for such an important format as the G8, the G8 is no longer there, neither the summit nor the G8 in itself," Merkel told Parliament.
The British government has been advocating an energy security plan to wean Europe from Russian energy over a 25-year period by ramping up imports from new sources, including shale gas from the United States and natural gas from Iraq, the Times said.
The proposal, sent to EU leaders in advance of the Brussels summit, calls for speeding up the development of a pipeline through Azerbaijan and Turkey that would bring gas to Europe from the Caspian Sea, bypassing Russian territory.
Russian Foreign Minister Sergei Lavrov said Russia would wrap up the legal procedures for annexing Crimea and Sevastopol this week. Russia's Parliament was expected to ratify it Thursday.
Late Wednesday, Ukraine's national security chief said Kiev would introduce visa travel restrictions on Russians, canceling previous arrangements that allowed them to visit Ukraine freely.