By Christian Lowe and Guy Faulconbridge
MOSCOW/KIEV (Reuters) - Russia cut off the gas to its neighbour Ukraine on Thursday after a contract dispute but increased supplies to other European states to try to reassure customers worried about possible disruption.
The European Union, which receives a fifth of its gas from pipelines crossing Ukraine, urged further negotiations to resolve the dispute and said all supply and transit commitments must be met.
Energy firms in Germany, France, Romania, and Austria said they had not seen any drop in supply from the Russian cut-off. Analysts say Europe has enough gas stockpiled to manage without Russian gas for several days, though not weeks.
In a sign that Russia and Ukraine were seeking a way out of the stand-off, a delegation from Ukrainian state-run gas company Naftogaz was to travel to Moscow on Thursday evening for talks, a source close to the negotiations told Reuters.
The EU is keen to avoid a repeat of a January 2006 row when Moscow cut off supplies to Ukraine, causing a brief fall in gas deliveries to other parts of Europe in mid-winter.
Russian gas export monopoly Gazprom halted supplies to Ukraine on Thursday morning after a failure to agree terms for supplying gas in 2009.
"We have fully cut off supplies to Ukraine as of 10:00 a.m. (7:00 a.m. British time) today," an Gazprom official told reporters at company headquarters in Moscow. "We continue supplying Europe in full."
Ukraine's Naftogaz said it had seen a reduction of pressure in its pipelines, and was pumping gas from its stockpiles, which it says are sufficient to last it several months.
As a precaution against any future supply disruption, Gazprom said it had stepped up volumes for European consumers beyond Ukraine to 326 million cubic metres (mcm) per day from the usual level of 300 mcm.
Both Russia and Ukraine -- which have clashed repeatedly over a drive by the pro-Western leadership in Kiev to join NATO -- say they will do nothing to jeopardise supplies to Europe.
The cut-off could, however, have a knock-on effect if it causes a drop in pressure in the transit pipelines or if Ukraine diverts flows bound for Europe.
Naftogaz said in a statement it guaranteed supplies to Europe but could not vouch for the "synchronised work of the gas transport systems of Ukraine, Russia and EU countries" because it no longer had a valid transit contract with Russia.
EU GAS SUPPLY
Ukraine's President Viktor Yushchenko has asked European Commission President Jose Manuel Barroso to get the EU to mediate, the Ukrainian mission in Brussels said. A Commission spokeswoman could not confirm the request.
The EU urged further negotiations. "All existing commitments to supply and transit must be honoured," the Czech Republic -- which took over the EU's rotating presidency on Thursday -- said in a joint statement with the Commission, the bloc's executive.
Pipelines that cross Ukraine carry about one-fifth of the EU's gas needs and are a major source of foreign currency revenue for Gazprom, Russia's biggest company.
The cut-off could tarnish Russia's reputation as a reliable energy supplier to Europe, five months after its war with southern neighbour Georgia damaged the Kremlin's standing in the West.
Germany's E.ON and BASF and Italy's ENI are among the biggest customers for Russian gas. If there is disruption, it could be some time before it is felt because of the large distances involved.
In Berlin, German Economy Minister Michael Glos said he regretted the dispute but expressed confidence consumers in Germany would not suffer. "All the necessary steps were taken to be ready to react adequately to any supply shortfall," he said.
A prolonged row could further undermine Ukraine's crisis-battered economy and politicians may be forced to take unpopular decisions, such as raising gas bills, as they gear up for a presidential election in 12 months.
If talks between Ukraine and Russia resume, they will have to resolve bitter disputes over the $2 billion Moscow says Kiev owes it for past supplies, and over the amount Gazprom will charge for deliveries this year.
Gazprom had offered gas at $250 per 1,000 cubic metres, a steep rise from 2008's $179.50 but still around half the current European market price.
Kiev says it is prepared to pay $201 per 1,000 cubic metres, and only on condition that Russia pays more for the right to ship gas across Ukrainian territory.
