Talks between Gazprom, the Russian energy consortium, and the Ukrainian government last week failed to reach agreement over Kiev's payment of prior shipments of natural gas. Gazprom sought $1.95 billion of the $4.45 billion it says Ukraine owes.
"Gas supplies to Ukraine have been reduced to zero," Ukrainian Energy Minister Yuri Prodan said.
Gazprom said shipments to other European countries would continue, although a notice on its website Monday announced, "By the proforma invoice for June the payments (from Ukraine) also were not received. Starting from today the Ukrainian company will receive only prepaid volumes of Russian gas."
Gazprom and Ukraine's Naftogaz natural gas company filed lawsuits against each other in Stockholm's commercial arbitration court Monday, with Gazprom seeking $4.5 billion in payments and Naftogaz hoping to recover what it termed $ billion in "overpayments" since 2010.
Ukrainian Prime Minister Arseniy Yatsenyuk connected the gas conflict to the larger military and political engagement between Russia and Ukraine, in which Russia annexed Crimea in February and has allegedly sent soldiers and supplies to eastern Ukraine to subvert order and encourage pro-Russian separatists.
"It is not about gas. It is a general Russian plan to destroy Ukraine. It is yet another step against the Ukrainian state and against Ukrainian independence," Yatsenyuk said.
Earlier in June, Gazprom received a $786 million partial payment on Ukraine's past due account; Ukraine was given more time to settle its debt but refused to use it, protesting an 80 percent price increase.
Ukraine paid $268 per 1,000 cubic meters of gas until April, when the price jumped to $485.50. Negotiations stalled last week after Ukraine offered to repay $1.95 billion if the price was reduced to $326; Russia's final offer was $385.