Russia ceases gas supply to Ukraine over unfulfilled prepayment

MOSCOW - Russian gas giant Gazprom on Wednesday ceased gas supply to Ukraine, citing that Kiev had failed to make the required upfront payments on time.

"Deliveries would be ceased until a new prepayment is received from Ukraine's (state-run energy firm) Naftogaz," Gazprom CEO Alexei Miller said.

No new prepayment from Kiev was received as of Wednesday morning, nor did Naftogaz requested gas deliveries, Miller was quoted by RIA Novosti news agency as saying.

The Ukrainian government later announced instruction for Naftogaz to halt all further purchases of Russian gas.

"The government has made the decision to instruct Naftogaz to halt the purchase of Russian gas, so as to end the confusion," Prime Minister Arseny Yatsenyuk said.

"This was done, first of all, because the pricing offers coming from our European partners are much lower than from our eastern neighbor," Yatsenyuk said, adding that overall gas consumption in Ukraine has been reduced some 20 percent.

Naftogaz said in October that price for fourth-quarter gas supply agreed with Russia was at 227.36 U.S. dollars per 1,000 cubic meters.

The two sides have been locked in disputes over gas supplies, pricing and debts, while the European Union (EU) played as mediator to avoid possible outage of its gas supplies from the east.

On Nov. 6, European Commissioner for Energy Union Maros Sefcovic warned of the expiry of the Russia-Ukraine contract.

If not renewed, Russian gas might not flow anymore through the Bratstvo gas pipeline, which leads from Russia through Ukraine and Slovakia to the Western Europe, Sefcovic said.