Russia Monday cut gas supplies to neighboring Ukraine by a quarter after debt talks failed, prompting Ukrainian President Viktor Yushchenko to warn of a possible new "gas war" with Moscow.
The European Union, which relies heavily on Russian gas piped through Ukraine, urged the two sides to find an agreement in a dispute reminiscent of a 2006 standoff that led to disruptions in E.U. gas supplies.
Russian state-run gas monopoly OAO Gazprom (GAZP.RS) said in a statement that it was forced to cut the gas after Ukraine failed to pay a $600 million debt and that E.U. supplies wouldn't be affected.
The dispute came as officials announced that Dmitry Medvedev, a Russian deputy prime minister and the chairman of Gazprom, had won Russia's presidential election Sunday.
Ukrainian state gas company Naftogaz has meanwhile promised not to divert gas bound for Europe to make up for the shortfall, while Ukrainian politicians accused Russia of putting undue pressure on Kiev's pro-Western leadership.
At a meeting in Kiev, Yushchenko told Ukrainian Prime Minister Yulia Tymoshenko of the need for "dynamic negotiations" with Gazprom "and not the provocation of a gas war" with Russia, the presidency said.
In a statement released shortly after a 0700 GMT deadline Monday, Gazprom said it had reduced gas supplies to Ukrainian consumers by 25 percent "to ensure its economic interests."
Gazprom said that it had cut supplies by 40 million cubic meters a day but that it remained open to further talks with Ukraine, adding: "Deliveries to European consumers are continuing and will continue at full capacity."
Monday's cut comes despite a Feb. 12 announcement by Yushchenko and Russian President Vladimir Putin that the debt dispute had been resolved after talks in the Kremlin.
Under that deal, Moscow had agreed to a Ukrainian demand to replace two controversial intermediary gas trading companies through which Ukraine pays for gas imported from Russia and Central Asia with more transparent firms.
Russian natural gas accounts for around a quarter of Ukraine's gas imports, with the rest coming from former Soviet republics in Central Asia via pipelines that go through Russia.
"The game of ultimatums for Ukraine continues," the head of the Yulia Tymoshenko Bloc fraction in Ukraine's parliament, Ivan Kirilenko, told Interfax news agency.
Vyacheslav Kirilenko, head of the parliamentary fraction of Yushchenko's Our Ukraine bloc, told Interfax: "This is simply pressure on Ukraine."
In the past Moscow has been criticized for cutting supplies to neighboring countries in pricing disputes that critics say are often politically motivated.
But Medvedev has defended the company's actions, saying earlier this month that Russia's gas was not "a freebie that comes in pretty plastic pipes."