Russia's state gas monopoly Gazprom said it would cut off gas supplies to Ukraine today after the two sides failed to reach an agreement on how much Ukraine will pay in 2009.
The cutoff threatened to be a replay of the January 2006 crisis, when a halt in Russian gas shipments to Ukraine led to a reduction of supplies to Europe.
Gazprom's chief executive, Alexei Miller, said the company would continue full shipments to the EU, which gets about a quarter of its gas from the company, mostly through pipelines that cross Ukraine. The company said that it would cut supplies unless Ukraine paid its debt and signed a deal for 2009 deliveries by midnight.
Ukraine's Prime Minister, Yulia Tymoshenko, assured the European Commission that there would be no disruption to supplies to Europe.
Mr Miller said: "All responsibility for the situation rests on the Ukrainian side." Ukraine's gas company, Naftogaz, said it paid $1.5bn (£1bn) to cover the debt, but Mr Miller said Gazprom had not received it.