Russia cuts gas supply to Ukraine as tensions soar

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Russia cuts gas supply to Ukraine as tensions soar
People carry the Virgin Mary of Tikhvin icon, one of the most significant Russian Orthodox icons, during a rally in Moscow, Russia, on Saturday, Aug. 2, 2014. Several hundred people rallied to support people of Donetsk and Lugansk regions fighting against Ukrainian government forces. (AP Photo/Ivan Sekretarev)
Pro-Russian rebels shoot in the air as they celebrate Paratroopers' Day in the city of Donetsk, eastern Ukraine Saturday, Aug. 2, 2014. Paratroopers are an elite unit of the Soviet and Russian Armies and a lot of rebels were paratroopers in the past. (AP Photo/Dmitry Lovetsky)
Pro-Russian rebels ride their APC as they celebrate Paratroopers' Day in the city of Donetsk, eastern Ukraine Saturday, Aug. 2, 2014. Paratroopers are an elite unit of the Soviet and Russian Armies and a lot of rebels were paratroopers in the past. (AP Photo/Dmitry Lovetsky)
People wait a bus at a bus stop with glasses protected with tapes from shattering by explosion in the city of Donetsk, eastern Ukraine Monday, Aug. 4, 2014. (AP Photo/Dmitry Lovetsky)
A flag of the 'Russian Orthodox Army', one of pro-Russian rebel battalions, is seen flying near a statue of Soviet Union founder Vladimir Lenin in the background, in the city of Donetsk, eastern Ukraine Monday, Aug. 4, 2014. (AP Photo/Dmitry Lovetsky)
DONETSK, UKRAINE - JULY 28: A photojournalist takes photo of destroyed Ukranian tank during the clashes between Ukranian army and pro-Russian separatists in Donetsk, Ukraine on 28 July, 2014. (Photo by Soner Kilinc/Anadolu Agency/Getty Images)
DONETSK, UKRAINE - JULY 28: Pro-Russian separatists shot the building during the clashes between Ukranian army in Donetsk, Ukraine on 28 July, 2014. Ukranian army capture the region after the clashes. (Photo by Soner Kilinc/Anadolu Agency/Getty Images)
DONETSK, UKRAINE - JULY 28: A gas station is destroyed by pro-Russian separatists during the clashes between Ukranian army in Donetsk, Ukraine on 28 July, 2014. Ukranian army capture the region after the clashes. (Photo by Soner Kilinc/Anadolu Agency/Getty Images)
DONETSK, UKRAINE - JULY 28: A damaged building is seen after the Ukrainian army seized control of the Ukraine's Sievierodonetsk over pro-Russian seperatists on July 28, 2014. (Photo by Soner Kilinc/Anadolu Agency/Getty Images)
DONETSK, UKRAINE - JULY 28: A damaged building is seen after the Ukrainian army seized control of the Ukraine's Sievierodonetsk over pro-Russian seperatists on July 28, 2014. (Photo by Soner Kilinc/Anadolu Agency/Getty Images)
DONETSK, UKRAINE - JULY 28: A damaged building is seen after the Ukrainian army seized control of the Ukraine's Sievierodonetsk over pro-Russian seperatists on July 28, 2014. (Photo by Soner Kilinc/Anadolu Agency/Getty Images)
DONETSK, UKRAINE - JULY 28: A damaged building is seen after the Ukrainian army seized control of the Ukraine's Sievierodonetsk over pro-Russian seperatists on July 28, 2014. (Photo by Soner Kilinc/Anadolu Agency/Getty Images)
FILE - In this Wednesday, June 18, 2014, file photo, a pro-Russian fighter holds a gun during a handover of the bodies of Ukrainian troops killed in a plane shot down near Luhansk, at a checkpoint in the village of Karlivka near Donetsk, eastern Ukraine. Russia is resuming its military buildup along the Ukrainian border in an apparent attempt to intimidate its neighbor, NATO's chief said Thursday, June 19, 2014, as Ukrainian government forces unleashed a major offensive against pro-Moscow insurgents. (AP Photo/Evgeniy Maloletka, File)
Ukrainian army officer Nadezhda Savchenko, 33, speaks to journalists shortly after her capture in Luhansk, Ukraine, Thursday, June 19, 2014. Pro-Russian fighters in Luhansk have captured a Ukrainian army officer who was member of the Aidar battalion that was fighting in the outskirts of the city. Russian TV channel NTV reported that Nadezhda Savchenko is a helicopter pilot who went to fight in the eastern regions voluntarily during her official leave as she wanted to help her comrades. (AP Photo/Igor Golovniov)
FILE In this photo taken on Saturday, April 5, 2014, Oleh Lyashko, center left, leader of Ukrainian Radical Party and presidential candidate who supported the protests that ousted Russian-leaning president Viktor Yanukovych, poses with Ukrainian soldiers and officers at their camp near Ukraine-Russian border outside Chernihiv, 140km (87 miles) northeast of Kiev, Ukraine. Once, he was little more than an entertaining curiosity in Ukraine?s politics, noted for bringing vegetables and livestock to parliament where he was the only representative of a fringe nationalist party. But after Oleh Lyashko took up arms in Ukraine's east and interrorgated near-naked detained separatists, his star rose. (AP Photo/Osman Karimov, file)
Pro-Russian fighters guard the site of remnants of a downed Ukrainian army aircraft Il-76 as locals ride a motor-bike at the airport near Luhansk, Ukraine, Saturday, June 14, 2014. Pro-Russian separatists shot down the military transport plane Saturday in the country’s restive east, killing all 49 service personnel on board, Ukrainian officials said. (AP Photo/Evgeniy Maloletka)
A woman from Ukraine cries at a meeting with OSCE's secretary-general Lamberto Zannier at a camp for refugees from the conflict in Ukraine's east, in the village of Dmitriadovka near Rostov-on-Don, southern Russia, Thursday, June 12, 2014. The OSCE's secretary-general on Thursday visited a camp in Russia for refugees from the conflict in Ukraine's east and called for the fighting to end. (AP Photo/Mikhail Mordasov)
Children, one holding a Russian flag, from Ukraine, play at a camp for refugees from the conflict in Ukraine's east before a meeting with OSCE's secretary-general Lamberto Zannier, in the village of Dmitriadovka near Rostov-on-Don, southern Russia, Thursday, June 12, 2014. The OSCE's secretary-general on Thursday visited a camp in Russia for refugees from the conflict in Ukraine's east and called for the fighting to end. (AP Photo/Mikhail Mordasov)
OSCE's secretary-general Lamberto Zannier, right, visits a camp for refugees from the conflict in Ukraine's east in the village of Dmitriadovka near Rostov-on-Don, southern Russia, Thursday, June 12, 2014. The OSCE's secretary-general on Thursday visited a camp in Russia for refugees from the conflict in Ukraine's east and called for the fighting to end. According to the Interfax news agency, Lamberto Zannier said Thursday that the conflict in the east "is craziness which must be stopped." (AP Photo/Sergey Pivovarov)
People hold Donetsk republic flags and posters reading "Donbas, we are with you!" and "Fascism will not pass!" as they gather together during a rally in support of the pro-Russian Donetsk Peoples republic in Moscow, Russia, Wednesday, June 11, 2014. Russia is supplying humanitarian aid to Ukraine’s south-east with the aid of militia groups, Russian Foreign Minister Sergey Lavrov has said. (AP Photo/Alexander Zemlianichenko)
A pro-Russian fighter stands guard at a checkpoint in Slovyansk, eastern Ukraine, Thursday, June 12, 2014. The city has been an epicenter of a nearly two-month standoff between Ukrainian forces and pro-Russian rebels, who have seized administrative buildings, police stations and border posts across the region. (AP Photo/Evgeniy Maloletka)
Pro-Russian fighters collect ammunition from the site of remnants of a downed Ukrainian army aircraft Il-76 at the airport near Luhansk, Ukraine, Saturday, June 14, 2014. Pro-Russian separatists shot down the military transport plane Saturday in the country’s restive east, killing all 49 service personnel on board, Ukrainian officials said. (AP Photo/Evgeniy Maloletka)
A car burns after an explosion near the Regional administration building in Donetsk, eastern Ukraine, Thursday, June 12, 2014. Several people were injured after an explosion in central Donetsk on Thursday. (AP Photo/Evgeniy Maloletka)
A local woman prepares to take pictures of a site of a battle between Ukrainian troops and pro-Russian fighters in Mariupol, eastern Ukraine, Friday, June 13, 2014. Ukraine’s interior minister says that government troops have attacked pro-Russian separatists in the southern port of Mariupol. Arsen Avakov said Friday that four government troops were wounded as forces retook buildings occupied by the rebels in the center of the town. (AP Photo/Evgeniy Maloletka)
Ukrainian troops stand atop of a vehicle as they leave a site of battle in Mariupol, eastern Ukraine, Friday, June 13, 2014. Ukraine’s interior minister says that government troops have attacked pro-Russian separatists in the southern port of Mariupol. Arsen Avakov said Friday that four government troops were wounded as forces retook buildings occupied by the rebels in the center of the town. (AP Photo/Evgeniy Maloletka)
Ukrainian troops sit and stand atop vehicles as they leave a site of a battle in Mariupol, eastern Ukraine, Friday, June 13, 2014. Ukraine’s interior minister says that government troops have attacked pro-Russian separatists in the southern port of Mariupol. Arsen Avakov said Friday that four government troops were wounded as forces retook buildings occupied by the rebels in the center of the town. (AP Photo/Evgeniy Maloletka)
A body of a pro-Russian gunman lies in a truck at a checkpoint outside of the eastern Ukrainian city of Donetsk, who was killed during a battle between pro-Russian militiamen and Ukrainian forces in the town of Karlivka on May 23, 2014. At least five people were killed in fighting early Friday between pro-Russian militiamen and Ukrainian forces near the eastern city of Donetsk, an AFP photographer said. Fighting in the east has witnessed a bloody resurgence ahead of Sunday's presidential election that the pro-Russian insurgents have vowed to disrupt. AFP PHOTO / DIMITAR DILKOFF (Photo credit should read DIMITAR DILKOFF/AFP/Getty Images)
Pro-Russian militiamen take a rest at a checkpoint in Pisky, some 15 km from Donetsk, eastern Ukraine, on the road between Donetsk and Krasnoarmiisk, on May 23, 2014. At least five people were killed in fighting early Friday between pro-Russian militiamen and Ukrainian forces near Donetsk, an AFP photographer said. Fighting in the east has witnessed a bloody resurgence ahead of Sunday's presidential election that the pro-Russian insurgents have vowed to disrupt. AFP PHOTO / FABIO BUCCIARELLI (Photo credit should read FABIO BUCCIARELLI/AFP/Getty Images)
Pro-Russian gunmen stand at a checkpoint outside of the eastern Ukrainian city of Donetsk on May 23, 2014. At least five people were killed in fighting early Friday between pro-Russian militiamen and Ukrainian forces near Donetsk, an AFP photographer said. Fighting in the east has witnessed a bloody resurgence ahead of Sunday's presidential election that the pro-Russian insurgents have vowed to disrupt. AFP PHOTO / DIMITAR DILKOFF *** GRAPHIC CONTENT *** (Photo credit should read DIMITAR DILKOFF/AFP/Getty Images)
A Pro-Russian militia man poses aiming his sniper rifle in Donetsk, eastern Ukraine, on Friday, May 23, 2014. At least three people died when Ukrainian national guard unit and pro-Russian militiamen fought in the village of Karlivka early Friday. (AP Photo/Alexander Ermochenko)
A private house burns after it was set on fire by a mortar shell, on the outskirts of the town of Lysychansk, Ukraine, on Thursday, May 22, 2014. In the eastern Luhansk region, sustained gunfire and shelling rocked the town of Lysychansk. One mortar bomb hit a house, which burst into flames. Earlier today at least 11 Ukrainian troops were killed and about 30 others were wounded during an attack at a military checkpoint, the deadliest raid in the weeks of fighting in eastern Ukraine. (AP Photo/Evgeniy Maloletka)
A pro-Russian armed man runs past a burning house after it was set on fire by a mortar shell, on the outskirts of the town of Lysychansk, Ukraine, on Thursday, May 22, 2014. In the eastern Luhansk region, sustained gunfire and shelling rocked the town of Lysychansk. One mortar bomb hit a house, which burst into flames. Earlier today at least 11 Ukrainian troops were killed and about 30 others were wounded during an attack at a military checkpoint, the deadliest raid in the weeks of fighting in eastern Ukraine. (AP Photo/Evgeniy Maloletka)
Pro-Russian fighters pose for a photo in front of a burning cafe after impact of a mortar bomb, during fighting between Ukrainian government troops and pro-Russian militants at a checkpoint near the major highway which links Kharkiv, outside Slovyansk, Ukraine, early Thursday, May 22, 2014. Three days before Ukraine holds a presidential vote, pro-Russia insurgents attacked a military checkpoint Thursday in eastern Ukraine, killing at least 11 troops and wounding 30 others in the deadliest raid yet in weeks of fighting. (AP Photo/Rafael Yaghobzadeh)
Local residents look at a car destroyed during a gunfight, in the village of Karlivka, some 40 kilometers (25 miles) west of the city of Donetsk, eastern Ukraine, on Friday, May 23, 2014. At least three people died when Ukrainian national guard unit and pro-Russian militiamen fought in the village of Karlivka early Friday.(AP Photo/Alexander Ermochenko)
The body of a man, who was killed during fighting, lies on the ground in the village of Karlivka, west of Donetsk, Ukraine, Friday, May 23, 2014. At least three people died when Ukrainian national guard unit and pro-Russian militiamen fought in the village of Karlivka early Friday. (AP Photo/Vadim Ghirda)
Ukrainian soldiers sit on top of an APC leaving the site of a Ukrainian check point that came under attack by pro-Russians near the village of Blahodatne, eastern Ukraine, on Thursday, May 22, 2014. Several Ukrainian troops were killed and many others were wounded when Pro-Russians attacked a military checkpoint, the deadliest raid in the weeks of fighting in eastern Ukraine. (AP Photo/Vadim Ghirda)
An Ukrainian soldier holds his weapon as a vehicle approaches while manning a road block next to an Ukrainian check point that came under attack by pro-Russians near the village of Blahodatne, eastern Ukraine, on Thursday, May 22, 2014. At least 11 Ukrainian troops were killed and about 30 others were wounded when Pro-Russians attacked a military checkpoint near Blahodatne, the deadliest raid in the weeks of fighting in eastern Ukraine.(AP Photo/Vadim Ghirda)
Workers of the Ukrainian company Metinvest clear away debris in a government building in the eastern Ukrainian city of Mariupol, Friday, May 16, 2014. Local patrols by steelworkers have forced pro-Russia insurgents to retreat from the government buildings they had seized in a major city in eastern Ukraine, giving residents hope that a wave of anarchy was over. Mariupol is the second-largest city in Ukraine's eastern Donetsk region, one of two regions that declared independence Monday from the central government in Kiev. Citizen patrols began there earlier this week as Rinat Akhmetov, Ukraine's richest man, urged steelworkers at his factories to help police restore order. (AP Photo/Evgeniy Maloletka)
Workers of the Ukrainian company Metinvest clear away debris in a government building in the eastern Ukrainian city of Mariupol, Friday, May 16, 2014. Local patrols by steelworkers have forced pro-Russia insurgents to retreat from the government buildings they had seized in a major city in eastern Ukraine, giving residents hope that a wave of anarchy was over. Mariupol is the second-largest city in Ukraine's eastern Donetsk region, one of two regions that declared independence Monday from the central government in Kiev. Citizen patrols began there earlier this week as Rinat Akhmetov, Ukraine's richest man, urged steelworkers at his factories to help police restore order. (AP Photo/Evgeniy Maloletka)
Workers of the Ukrainian company Metinvest pose for a photo as they clear away debris in a government building in the eastern Ukrainian city of Mariupol, Friday, May 16, 2014. Local patrols by steelworkers have forced pro-Russia insurgents to retreat from the government buildings they had seized in a major city in eastern Ukraine, giving residents hope that a wave of violence was over. Mariupol is the second-largest city in Ukraine's eastern Donetsk region, one of two regions that declared independence Monday from the central government in Kiev. Citizen patrols began there earlier this week as Rinat Akhmetov, Ukraine's richest man, urged steelworkers at his factories to help police restore order.(AP Photo/Evgeniy Maloletka)
The Azovstal metallurgical plant is silhouetted against the sky in the eastern Ukrainian city of Mariupol, Friday, May 16, 2014. Local patrols by steelworkers have forced pro-Russia insurgents to retreat from the government buildings they had seized in a major city in eastern Ukraine, giving residents hope that a wave of violence was over. Mariupol is the second-largest city in Ukraine's eastern Donetsk region, one of two regions that declared independence Monday from the central government in Kiev. (AP Photo/Evgeniy Maloletka)
Ukrainian police officers with workers of the Ukrainian company Metinvest patrol in a street in the eastern Ukrainian city of Mariupol, Friday, May 16, 2014. Local patrols by steelworkers have forced pro-Russia insurgents to retreat from the government buildings they had seized in a major city in eastern Ukraine, giving residents hope that a wave of violence was over. Mariupol is the second-largest city in Ukraine's eastern Donetsk region, one of two regions that declared independence Monday from the central government in Kiev. Citizen patrols began there earlier this week as Rinat Akhmetov, Ukraine's richest man, urged steelworkers at his factories to help police restore order.(AP Photo/Evgeniy Maloletka)
Gunmen hold their weapons while pro-Russian protesters listen to a speaker as they declare independence for the Luhansk region in eastern Ukraine on Monday, May 12, 2014. Pro-Russia separatists in eastern Ukraine declared independence Monday for the Donetsk and Luhansk regions following their contentious referendum ballot. (AP Photo/Evgeniy Maloletka)
Pro-Russian gunmen and activists react while listening to a speaker as they declare independence for the Luhansk region in eastern Ukraine on Monday, May 12, 2014. Pro-Russia separatists in eastern Ukraine declared independence Monday for the Donetsk and Luhansk regions following their contentious referendum ballot. (AP Photo/Evgeniy Maloletka)
A local resident casts a shadow leaving a booth to cast her ballot at a polling station in Luhansk, Ukraine, on Sunday, May 11, 2014. Residents of two restive regions in eastern Ukraine cast ballots Sunday in referendums, which seek approval for declaring sovereign people's republics in the Donetsk and Luhansk regions. (AP Photo/Evgeniy Maloletka)
A gunman stands guard as pro-Russian protesters listen to a speaker as they declare independence for the Luhansk region in eastern Ukraine on Monday, May 12, 2014. The words on the nameplate read "Luhansk". Pro-Russia separatists in eastern Ukraine declared independence Monday for the Donetsk and Luhansk regions following their contentious referendum ballot. (AP Photo/Evgeniy Maloletka)
A child is held at a window, in Odessa, Ukraine, Monday, May 12, 2014. The Kremlin made it clear Monday that Moscow has no intention of immediately annexing two regions in eastern Ukraine after a weekend referendum there showed most voters allegedly backing sovereignty. Ukraine's central government and the West strongly criticized Sunday's hastily arranged, unofficial ballot in the Donetsk and Luhansk regions. (AP Photo/Vadim Ghirda)
The chief of commission that organized the recent referendum ballot Alexander Malyhin, center, speaks to armed pro-Russian men at an administration building in the eastern Ukraine city of Luhansk, Monday, May 12, 2014. Pro-Russia separatists in eastern Ukraine declared independence Monday for the Donetsk and Luhansk regions. (AP Photo/Evgeniy Maloletka)
Wife of Alexander Afendikov, 61, a church watchman, who was killed by shrapnel near the church during shelling by Ukrainian government forces, mourns holding his hand during a farewell ceremony in Slovyansk, Ukraine, Thursday, June 19, 2014. Heavy fighting raged near Krasnyi Liman, just east of the rebel stronghold of Slovyansk, a city in the Donetsk region that has been the epicenter of violence during the past two months. (AP Photo/Andrei Petrov)
Pro-Russian people listen to insurgent leader Denis Pushilin behind barricades in front of a regional administration building that was seized by pro-Russian activists in Donetsk, eastern Ukraine, Monday, May 12, 2014. The referendum balloting Sunday in the Donetsk and Luhansk regions, which together have 6.5 million people, was condemned as a sham and a violation of international law by Kiev’s interim government and other western powers. (AP Photo/Alexander Zemlianichenko)
Relatives cry around the coffin of 17 year-old Vadim Papura during a religious service outside his apartment block, in Odessa, Ukraine, Tuesday May 6, 2014. Papura died after jumping out of the burning trade union building in an attempt to escape Friday's fire that killed most of the 40 people that died after riots erupted last Friday. (AP Photo/Vadim Ghirda)
Pro-Russian protesters, reflected in a puddle, applaud a speaker as they declare independence for the Luhansk region in eastern Ukraine on Monday, May 12, 2014. Pro-Russia separatists in eastern Ukraine declared independence Monday for the Donetsk and Luhansk regions following their contentious referendum ballot. (AP Photo/Evgeniy Maloletka)
Russian President Vladimir Putin (2nd R) and Swiss President and Foreign Minister Didier Burkhalter (R) walk into a hall to attend a news conference at the Kremlin in Moscow, on May 7, 2014. Putin called on separatists in east Ukraine on Wednesday to postpone a referendum on independence for the mostly Russian-speaking region and said Moscow had withdrawn troops from the border with Ukraine. AFP PHOTO / POOL / SERGEI KARPUKHIN (Photo credit should read SERGEI KARPUKHIN/AFP/Getty Images)
Russian President Vladimir Putin speaks at a joint news conference with Swiss Federal President Didier Burkhalter in the Kremlin in Moscow, Wednesday, May 7, 2014. Russia has pulled back its troops from the Ukrainian border, Vladimir Putin told diplomats Wednesday as he urged insurgents in southeast Ukraine to postpone their planned referendum Sunday on autonomy. (AP Photo/Sergei Karpukhin, Pool)
A man guards a road intersection as pro-Russian activists strengthen the barricades in front of the Ukrainian regional office of the Security Service in Slovyansk, Ukraine, Wednesday, May 7, 2014. Russia has pulled back its troops from the Ukrainian border, Vladimir Putin told diplomats Wednesday as he urged insurgents in southeastern Ukraine to postpone their planned referendum Sunday on autonomy. (AP Photo/Alexander Zemlianichenko)
Masked pro-Russian activists strengthen the barricades in front of the Ukrainian regional office of the Security Service in Slovyansk, Ukraine, Wednesday, May 7, 2014. Russia has pulled back its troops from the Ukrainian border, Vladimir Putin told diplomats Wednesday as he urged insurgents in southeastern Ukraine to postpone their planned referendum Sunday on autonomy. (AP Photo/Alexander Zemlianichenko)
Ukrainian Prime Minister Arseniy Yatsenyuk, centre, talks with Ukrainian soldiers at Slovyansk, Ukraine, Wednesday, May 7, 2014. Russian President Putin on Wednesday announced that Russia has pulled back its troops from the Ukrainian border, and called on Ukraine’s military to halt operations against pro-Russia activists who have seized government buildings and police stations in cities in eastern Ukraine. (AP Photo/Andrew Kravchenko)
Ukrainian Prime Minister Arseniy Yatsenyuk, left, inspects a Ukrainian army APC on the road at Slovyansk, Ukraine, Wednesday, May 7, 2014. Russian President Putin on Wednesday announced that Russia has pulled back its troops from the Ukrainian border, and called on Ukraine’s military to halt operations against pro-Russia activists who have seized government buildings and police stations in cities in eastern Ukraine.(AP Photo/Andrew Kravchenko)
Ukrainian Prime Minister Arseniy Yatsenyuk, center, shake hands with a Ukrainian soldier at a block post on the road at Slovyansk, Ukraine, Wednesday, May 7, 2014. Ukrainian military operations that began Monday to expunge pro-Russia forces from the city of Slovyansk were the interim government's most ambitious effort so far to quell weeks of unrest in Ukraine's mainly Russian-speaking east. (AP Photo/Andrew Kravchenko, Pool)
Ukrainian Prime Minister Arseniy Yatsenyuk, right, sits on top of an APC as he speak with a Ukrainian soldier at a block post on the road at Slovyansk, Ukraine, Wednesday, May 7, 2014. Ukrainian military operations that began Monday to expunge pro-Russia forces from the city of Slovyansk were the interim government's most ambitious effort so far to quell weeks of unrest in Ukraine's mainly Russian-speaking east. (AP Photo/Andrew Kravchenko, Pool)
Ukrainian Prime Minister Arseniy Yatsenyuk, right, shake hands with Ukrainian soldiers at a block post on the road at Slovyansk, Ukraine, Wednesday, May 7, 2014. Ukrainian military operations that began Monday to expunge pro-Russia forces from the city of Slovyansk were the interim government's most ambitious effort so far to quell weeks of unrest in Ukraine's mainly Russian-speaking east. (AP Photo/Andrew Kravchenko, Pool)
Friends and relatives carry the coffin of 21-year old nurse Yulia Izotova during her funeral in Kramatorsk, Ukraine, Monday, May 5, 2014. Witnesses say Izotova was killed by shots from a Ukrainian military column on the road near Kramatorsk. Ukraine sent an elite national guard unit to re-establish control Monday over the southern port of Odessa and government troops fought pitched gunbattles with a pro-Russia militia around an eastern city. (AP Photo/Manu Brabo)
Relatives cry around the coffin of 17 year-old Vadim Papura during a religious service outside his apartment block, in Odessa, Ukraine, Tuesday May 6, 2014. Papura died after jumping out of the burning trade union building in an attempt to escape Friday's fire that killed most of the 40 people that died after riots erupted last Friday. (AP Photo/Vadim Ghirda)
Relatives cry around the coffin of 17 year-old Vadim Papura during a religious service outside his apartment block, in Odessa, Ukraine, Tuesday May 6, 2014. Papura died after jumping out of the burning trade union building in an attempt to escape Friday's fire that killed most of the 40 people that died after riots erupted last Friday. (AP Photo/Vadim Ghirda)
In this image taken from Rossia 24 television channel TV, an injured Ukrainian military helicopter pilot is assisted by pro-Russian activists after he was shot down in Slovyansk, eastern Ukraine, Friday May 2, 2014. Pro-Russia forces shot down two Ukrainian helicopters Friday as Ukraine launched its first major offensive against an insurgency that has seized government buildings in the east. The Kremlin said Kiev's move against the insurgents "destroyed" hopes for peace in the region. (AP Photo/Rossia 24 Television Channel) TV OUT
In this image taken from Rossia 24 television channel TV, an injured Ukrainian military helicopter pilot is assisted by pro-Russian activists after he was shot down in Slovyansk, eastern Ukraine, Friday May 2, 2014. Pro-Russia forces shot down two Ukrainian helicopters Friday as Ukraine launched its first major offensive against an insurgency that has seized government buildings in the east. The Kremlin said Kiev's move against the insurgents "destroyed" hopes for peace in the region. (AP Photo/Rossia 24 Television Channel) TV OUT
Friends and relatives carry the coffin of 21-year old nurse Yulia Izotova during her funeral in Kramatorsk, Ukraine, Monday, May 5, 2014. Witnesses say Izotova was killed by shots from a Ukrainian military column on the road near Kramatorsk. Ukraine sent an elite national guard unit to re-establish control Monday over the southern port of Odessa and government troops fought pitched gunbattles with a pro-Russia militia around an eastern city. (AP Photo/Manu Brabo)
In this image taken from Rossia 24 television channel TV, an injured Ukrainian military helicopter pilot is assisted by pro-Russian activists after he was shot down in Slovyansk, eastern Ukraine, Friday May 2, 2014. Pro-Russia forces shot down two Ukrainian helicopters Friday as Ukraine launched its first major offensive against an insurgency that has seized government buildings in the east. The Kremlin said Kiev's move against the insurgents "destroyed" hopes for peace in the region. (AP Photo/Rossia 24 Television Channel) TV OUT
In this image taken from Rossia 24 television channel TV, an injured Ukrainian military helicopter pilot is assisted by pro-Russian activists after he was shot down in Slovyansk, eastern Ukraine, Friday May 2, 2014. Pro-Russia forces shot down two Ukrainian helicopters Friday as Ukraine launched its first major offensive against an insurgency that has seized government buildings in the east. The Kremlin said Kiev's move against the insurgents "destroyed" hopes for peace in the region. (AP Photo/Rossia 24 Television Channel) TV OUT
Ukrainian soldiers stand guard at a road leading into Slovyansk, eastern Ukraine, Friday, May 2, 2014. Ukraine launched what appeared to be its first major assault against pro-Russian forces who have seized government buildings in the country's east, with fighting breaking out Friday in a city that has become the focus of the insurgency. (AP Photo/Darko Vojinovic)
This image taken from video shows Ukrainian government troops guard a checkpoint just outside Slovyansk, eastern Ukraine, Friday, May 2, 2014. Ukraine launched what appeared to be its first major assault against pro-Russian forces who have seized government buildings in the country's east, with fighting breaking out Friday in a city that has become the focus of the insurgency. (AP Photo/Andrei Petrov)
A Pro-Russian activist, right, speaks with police officers during clashes in front of the regional administration building in Donetsk, Ukraine, Thursday, May 1, 2014. Anti-government demonstrators in Donetsk have stormed the local prosecutor's office. The clash came after a march by several hundred people carrying flags of the Donetsk People's Republic, a movement that seeks either greater autonomy from the central government, or independence and possible annexation by Russia. (AP Photo/Evgeniy Maloletka)
Smoke rises from an explosion near a children's hospital following shelling from Ukrainian government forces in Slovyansk, Ukraine, Thursday, June 19, 2014. Heavy fighting raged near Krasnyi Liman, just east of the rebel stronghold of Slovyansk, a city in the Donetsk region that has been the epicenter of violence during the past two months. (AP Photo/Andrei Petrov)
A Ukrainian military helicopter lands at a checkpoint which troops seized in the early morning in the village of Andreevka, 7 kms from the centre of the southern Ukrainian city of Slavyansk, on May 2, 2014. Ukraine's military lost two helicopters and two servicemen on May 2 in a deadly offensive launched just before dawn against pro-Russian rebels holding the flashpoint town of Slavyansk, insurgents and authorities said. AFP PHOTO / VASILY MAXIMOV (Photo credit should read VASILY MAXIMOV/AFP/Getty Images)
A Ukrainian soldier stands guard at a road leading into Slovyansk, eastern Ukraine, Friday, May 2, 2014. Ukraine launched what appeared to be its first major assault against pro-Russian forces who have seized government buildings in the country's east, with fighting breaking out Friday in a city that has become the focus of the insurgency. (AP Photo/Darko Vojinovic)
DONETSK, UKRAINE - MAY 2: The Ukrainian Ministry of Defense announced that four pro-Russian separatists, who shot allegedly two Ukrainian helicopters down detained in Donetsk, Ukraine on May 2, 2014. Two Ukrainian helicopters were shot down, killing a pilot and serviceman during military operations against armed pro-Russian separatists in the east of Slavyansk on Friday. (Photo by Ukrainian Ministry of Defense/Pool/Anadolu Agency/Getty Images)
A helicopter lands near a tank at a checkpoint seized in the early morning in the village of Andreevka, 7 km from the center of the southern Ukrainian city of Slavyansk, on May 2, 2014. Ukraine's military lost two helicopters and two servicemen on May 2 in a deadly offensive launched just before dawn against pro-Russian rebels holding the flashpoint town of Slavyansk, insurgents and authorities said. AFP PHOTO / VASILY MAXIMOV (Photo credit should read VASILY MAXIMOV/AFP/Getty Images)
Russian military transport helicopters maneuver during training near Novocherkassk, Rostov region, about 50 kilometers (31 miles) from Ukrainian border, Russia, Saturday, April 26, 2014. (AP Photo/Pavel Golovkin)
An army helicopter flies over Ukrainian government troops guard at the checkpoint near village of Dolina, 30 kilometers (18 miles) from Slovyansk, eastern Ukraine, Saturday, April 26, 2014. Ukrainian authorities are undertaking a security operation to liberate the nearby city of Slovyansk, which is currently controlled by an armed pro-Russian insurgency. (AP Photo/Sergei Grits)
A pro-Russian gunman prepares his weapon as his comrades are about to storm a regional police station building in Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo)
A Pro-Russian activist throws a Ukraine flag out of the window as other celebrate the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
A group of Ukrainian police officers stand outside the administration building which has been captured by Pro-Russian activists in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The Ukrainian police capitulated their position without a fight. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
Pro-Russian activists storm an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
A group of Ukrainian police officers leave the administration building which has been captured by Pro-Russian activists in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The Ukrainian police capitulated their position without a fight. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
Russian, top, and a Donbas Republic flag are seen atop an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. Dombas is a region of Ukraine, which separatists want to create a separate republic. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
A Pro-Russian activist waves a Donbas Republic flag over a crowd celebrating the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
A ro-Russian activist sitting at a barricade at the regional administration building in Donetsk, Ukraine, Tuesday, April 29, 2014. The pro-Russian action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Efrem Lukatsky)
Masked pro-Russian activists march to storm an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
Pro-Russian activists, one of them holds a Kalashnikov gun, as they guard an entrance to the captured administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
Pro-Russian activists applaud, celebrating the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
Masked pro-Russian activists waving the flag of the Crimea city of Sevastopol gather together to storm an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
Pro-Russian activists with Orthodox icons pray celebrating the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
A pro-Russian activist storms an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
Pro-Russian activists storm an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
Pro-Russian activists with an Orthodox icon look at Russian and Donbas Republic flags celebrating the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
A Pro-Russian activist waves a Donbas Republic flag over a crowd celebrating the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. Dombas is a region of Ukraine, which separatists want to create a separate republic. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
Pro-Russian activists sit at a barricade at the regional administration building in Donetsk, Ukraine, Tuesday, April 29, 2014. The pro-Russian action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Efrem Lukatsky)
A Pro-Russian activist waves a stick celebrating the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. (AP Photo/Alexander Zemlianichenko)
Pro-Russian activists storm an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
Pro-Russian activists trample a Ukraine flag as other celebrate the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
Pro-Russian activists storm an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns.(AP Photo/Alexander Zemlianichenko)
A Pro-Russian activist waves a Donbas Republic flag over a crowd celebrating the capture of an administration building in the center of Luhansk, Ukraine, one of the largest cities in Ukraine's troubled east, Tuesday, April 29, 2014, as demonstrators demand greater autonomy for Ukraine's regions. The action on Tuesday further raises tensions in the east, where insurgents have seized control of police stations and other government buildings in at least 10 cities and towns. Dombas is a region of Ukraine, which separatists want to create a separate republic. (AP Photo/Alexander Zemlianichenko)
Relatives cry around the coffin of 17 year-old Vadim Papura during a religious service outside his apartment block, in Odessa, Ukraine, Tuesday May 6, 2014. Papura died after jumping out of the burning trade union building in an attempt to escape Friday's fire that killed most of the 40 people that died after riots erupted last Friday. (AP Photo/Vadim Ghirda)
Relatives cry around the coffin of 17 year-old Vadim Papura during a religious service outside his apartment block, in Odessa, Ukraine, Tuesday May 6, 2014. Papura died after jumping out of the burning trade union building in an attempt to escape Friday's fire that killed most of the 40 people that died after riots erupted last Friday. (AP Photo/Vadim Ghirda)
Relatives cry around the coffin of 17 year-old Vadim Papura during a religious service outside his apartment block, in Odessa, Ukraine, Tuesday May 6, 2014. Papura died after jumping out of the burning trade union building in an attempt to escape Friday's fire that killed most of the 40 people that died after riots erupted last Friday. (AP Photo/Vadim Ghirda)
A girl stands in a tent in a camp for refugees from the conflict in Ukraine's east on the border with Ukraine in the town of Donetsk in Rostov-on-Don region, Russia, Friday, June 20, 2014. Clashes between Ukrainian government forces and pro-Russia rebels flared ahead of the publication of a presidential peace plan that includes a unilateral cease-fire. (AP Photo/Sergey Pivovarov)
A Ukrainian soldier closes a gate of a Ukrainian military unit, damaged after pro-Russian fighters' attack in the city of Artyomovsk, Donetsk region, eastern Ukraine Friday, June 20, 2014. Seven Ukrainian troops were killed in overnight fighting in the restive east, an official said Friday, as clashes between government forces and pro-Russia rebels flared ahead of the publication of a presidential peace plan that includes a unilateral cease-fire. (AP Photo/Dmitry Lovetsky)
A man examines a destroyed building after fighting between Ukrainian and pro-Russian fighters in city of Artyomovsk, Donetsk region, eastern Ukraine Friday, June 20, 2014. Seven Ukrainian troops were killed in overnight fighting in the restive east, an official said Friday, as clashes between government forces and pro-Russia rebels flared ahead of the publication of a presidential peace plan that includes a unilateral cease-fire. (AP Photo/Dmitry Lovetsky)
A girlfriend and a relative say their goodbyes to a new volunteer recruit of the Ukrainian army 'Azov' battalion after a military oath ceremony in Kiev and before his contingent heads towards eastern regions, on June 23, 2014. Some 600 new volunteer recruits of the battalion, mainly representatives of the eastern Donbass region of Ukraine, who followed combat training during three weeks will take part in the military operation against armed pro-Russian militants in the east of the country. Ukraine pressed German Chancellor Angela Merkel and other Western allies today to help end a pro-Russian uprising that has continued to rage in the industrial east despite Kiev's unilateral ceasefire. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
New volunteer recruits of the Ukrainian army 'Donbass' battalion take a military oath during a ceremony of the National Guard unit near the Novi Petrivtsi village not far from Kiev, on June 23, 2014. Some 600 new volunteer recruits of the battalion, mainly representatives of the eastern Donbass region of Ukraine, who followed combat training during three weeks will take part in the military operation against armed pro-Russian militants in the east of the country. Ukraine pressed German Chancellor Angela Merkel and other Western allies today to help end a pro-Russian uprising that has continued to rage in the industrial east despite Kiev's unilateral ceasefire. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
New volunteer recruits of the Ukrainian army 'Donbass' battalion take part in a military oath ceremony of the National Guard near the Novi Petrivtsi village not far from Kiev, on June 23, 2014. Some 600 new volunteer recruits of the battalion, mainly representatives of the eastern Donbass region of Ukraine, who followed combat training during three weeks will take part in the military operation against armed pro-Russian militants in the east of the country. Ukraine pressed German Chancellor Angela Merkel and other Western allies today to help end a pro-Russian uprising that has continued to rage in the industrial east despite Kiev's unilateral ceasefire. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
New volunteer recruits of the Ukrainian army 'Azov' battalion take part in a military oath ceremony in Kiev, on June 23, 2014. Some 600 new volunteer recruits of the battalion, mainly representatives of the eastern Donbass region of Ukraine, who followed combat training during three weeks will take part in the military operation against armed pro-Russian militants in the east of the country. Ukraine pressed German Chancellor Angela Merkel and other Western allies today to help end a pro-Russian uprising that has continued to rage in the industrial east despite Kiev's unilateral ceasefire. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
A new volunteer recruit of the Ukrainian army 'Donbass' battalion flashes a 'victory sign' during a military oath ceremony of the National Guard near the Novi Petrivtsi village not far from Kiev, on June 23, 2014. Some 600 new volunteer recruits of the battalion, mainly representatives of the eastern Donbass region of Ukraine, who followed combat training during three weeks will take part in the military operation against armed pro-Russian militants in the east of the country. Ukraine pressed German Chancellor Angela Merkel and other Western allies today to help end a pro-Russian uprising that has continued to rage in the industrial east despite Kiev's unilateral ceasefire. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Igor Strelkov, a pro-Russian rebel commander speaks to the media in the city of Donetsk, eastern Ukraine Monday, July 28, 2014. Igor Strelkov held a briefing about a military situation in the Donetsk region on Monday evening. (AP Photo/Dmitry Lovetsky)
Igor Strelkov, a pro-Russian rebel commander speaks to the media in the city of Donetsk, eastern Ukraine Monday, July 28, 2014. Igor Strelkov held a briefing about a military situation in the Donetsk region on Monday evening. (AP Photo/Dmitry Lovetsky)
A police officer stands guard as a woman walks past pieces of the crashed Malaysia Airlines Flight 17 in the village of Petropavlivka, Donetsk region, eastern Ukraine Friday, July 25, 2014. (AP Photo/Dmitry Lovetsky)
A Dutch investigator examines the site of the crashed Malaysia Airlines Flight 17 in the village of Rassipne, Donetsk region, eastern Ukraine Friday, July 25, 2014. (AP Photo/Dmitry Lovetsky)
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By NATALIYA VASILYEVA and DAVID McHUGH
Associated Press

MOSCOW (AP) -- Russia halted natural gas deliveries to Ukraine on Monday, spurning Ukraine's offer to pay some of its multibillion-dollar gas debt and demanding upfront payments for future supplies.

The decision, coming amid deep tensions over eastern Ukraine, provoked strong words from both sides but does not immediately affect the crucial flow of Russian gas to Europe. Ukraine has enough reserves to last until December, according to the head of its state gas company Naftogaz.

Still, the Russian move could disrupt Europe's long-term energy supplies if the issue is not resolved, analysts said. Previous gas disputes left Ukraine and some Balkan nations shivering for nearly two weeks in the dead of winter.

The gas conflict is part of a wider dispute over whether Ukraine aligns itself with Russia or with the 28-nation European Union and comes amid a crisis in relations following Russia's annexation of Ukraine's Crimean Peninsula in March. Ukraine accuses Russia of supporting an armed separatist insurgency in its eastern regions, which Russia denies.

Ukraine's new president, meanwhile, said Monday that he will propose a detailed peace plan this week that includes a cease-fire with the separatist rebels. But before that happens, the armed forces must secure control over Ukraine's porous border with Russia, President Petro Poroshenko said at a meeting of his national security council.

"As soon as the border is closed, we can immediately declare a cease-fire," he said. "Declaring a cease-fire while the border is open would be irresponsible."

Russia-Ukraine Gas Dispute Unnerves Markets

There was no immediate response from the separatists to Poroshenko's comments.

Ukraine, one of the most energy inefficient countries in Europe, has been chronically behind on payments for the Russian natural gas needed to heat its homes and fuel its industries. In addition, Russia had been giving its neighbor cut-rate sweetheart deals on gas for various political reasons, a practice that came to a halt April 1.

Russia had demanded $1.95 billion by Monday for past-due bills. At talks over the weekend in Kiev, Ukraine was ready to accept a compromise of paying $1 billion now and more later, but Russia rejected the offer, the European Commission said.

Sergei Kupriyanov, spokesman for the Russian gas giant Gazprom, said since Ukraine missed the deadline, from now on it had to pay in advance for energy. Yet that's a nearly impossible demand for the cash-strapped nation, which is fighting an insurgency and investigating possibly billions lost to corruption under its former pro-Russian president, Viktor Yanukovych.

Europe gets about 30 percent of its gas from Russia, and about half of that goes through the pipelines across Ukraine. In 2013, Ukraine imported nearly 26 billion cubic meters of gas from Russia, just over half of its annual consumption.

Kupriyanov said Russian gas supplies for Europe will continue through Ukrainian pipelines as planned and warned Ukraine to make sure they reach European customers.

Analyst Tim Ash at Standard Bank PLC said Ukraine could in theory simply take what it wants, since gas deliveries in the pipelines are intermingled. That would result in a shortage in gas to Europe that could hinder building up enough stored gas ahead of the critical winter heating season.

"This is unlikely to bring a short-term hit to gas supply in Europe, but it will build up problems for the winter unless a deal is reached quickly," he said in an email.

Bulgaria, Slovakia and Hungary get 80 percent or more of their gas from Russia, while Poland, Austria and Slovenia get around 60 percent.

At a news conference in Moscow, Alexei Miller, the CEO of Gazprom, berated the Ukrainian government, saying it scoffed at compromise and was deliberately turning commercial negotiations into a political discourse.

"Ukraine will get as much gas as it pays for," Miller said Monday. "The risks to the (gas) transit are there and they're significant."

He said in order to prevent serious disruptions to energy supplies in winte r, Ukraine needs to pump in gas to its underground storages before mid-October. The current amount of gas in storage is not enough for Europe to last through the winter, he said.

In Kiev, Ukrainian Prime Minister Arseniy Yatsenyuk angrily rejected the Russian position, putting Gazprom's move on par with the annexation of Crimea and the pro-Russia insurgency in eastern Ukraine.

"We won't subsidize Gazprom," he said. "Ukrainians will not take $5 billion per year (out of their pockets) to let Russia spend this money on weapons, tanks and planes to bomb Ukrainian territory."

Gazprom had tolerated the late payments but now says Ukraine owes a total of $4.458 billion for gas from last year and this year.

In December, Russia offered Yanukovych a discounted price of $268.50 per thousand cubic meters after he backed out of an economic and political agreement with the EU. But Russia annulled all price discounts after Yanukovych was chased from power in February following months of protests, raising the gas price to $485 per thousand cubic meters starting April 1.

Russia has offered a future price of $385, the price that Ukraine was paying until December, but Kiev has insisted on a lower price. Miller scoffed at that demand, saying it was significantly below European market prices.

In Moscow, Russian Prime Minister Dmitry Medvedev, at a meeting with the Gazprom chief and other officials, called the Ukrainian position "absurd" and said it amounted to blackmail over the pipelines.

Ukraine's energy minister, Yuriy Prodan, said Ukraine was prepared for the Russian cutoff.

"We are providing reliable transit of gas and supplies to domestic consumers," he said, adding that Ukraine could do that because of lower seasonal demand and previously stored gas.

In a related case, Gazprom announced Monday that it is suing Ukraine's Naftogaz in an international court for the $4.5 billion. Naftogaz said it has also filed a suit against Gazprom, seeking a "fair and market-based price" for gas, as well as a $6 billion repayment for what it said were overpayments for gas from 2010.

EU spokeswoman Sabine Berger said EU energy commissioner Guenther Oettinger remained committed to helping broker a deal between Kiev and Moscow.

One reason for EU involvement is the current state of Ukrainian gas reserves. Berger said they now stand at around 13.5 billion cubic meters but need to be at 18-20 billion cubic meters at the end of the summer for Europe to have enough gas this winter.

Berger said the EU was working toward a deal that could allow shipments of gas to Ukraine via Slovakia.

Ukrainian consumers, however, will be facing higher prices no matter what Russia does. Previous governments had sold gas to consumers at about a fifth of what Naftogaz pays for it - leaving little incentive to conserve and saddling the government with huge deficits.

Ukraine's new government is in the process of raising domestic gas prices, a condition of its $17 billion bailout loan from the International Monetary Fund.

--

McHugh reported from Kiev, Ukraine. Vladimir Isachenkov in Moscow and John-Thor Dahlburg in Brussels contributed to this report.

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