Russia's state gas monopoly Gazprom says it's fully cut off supplies to Ukraine after talks on a new purchase agreement failed.

A gas storage and transit point in Boyarka, just outside Kiev.

(01-02-2009 09:43) Russia's state gas monopoly Gazprom says it's fully cut off supplies to Ukraine after talks on a new purchase agreement failed. Gazprom also increased supplies to other European states, trying to reassure customers worried about possible disruptions.

Gazprom says it cut off supplies to Ukraine because the country is not ready to sign a contract for 2009... a contract with much higher gas prices than last year.

Russia also says Ukraine has failed to pay back its multi-billion dollar debt.

Ukraine has confirmed a steady drop in incoming gas supplies. The news is raising concerns on the streets of the Ukrainian capital, Kiev.

But Ukrainians are not the only ones worrying about the cut-off.

EU countries are also anxious about their supplies, as pipelines that cross Ukraine carry about one-fifth of the EU's gas needs.

In January 2006, a similar dispute over gas prices between Russia and Ukraine briefly interrupted gas supplies to Europe. EU states want to avoid a repeat.

Gazprom has assured them that their gas supplies will not be affected. It has even increased supplies to the EU by about 20 million cubic meters per day.

Earlier, Ukraine also said it would guarantee the uninterrupted transit of gas through Ukraine to Europe.