Russia's Gazprom, supplier of a quarter of Europe's gas, warns that unless Ukraine signs a new contract, gas supply to Europe will be cut.

Gazprom, the world's largest gas producer, says it would stop gas supplies to Ukraine at 0700 GMT Thursday if the country refuses to sing a new contract by the deadline of midnight Wednesday.

"In the absence of a contract we cannot deliver gas to Ukraine. And we will not," Gazprom's deputy chairman Alexander Medvedev said.

According to Medvedev, Ukraine's state-run energy company, NAK Naftogaz Ukrainy, notified the Russian side that it couldn't guarantee shipments to Europe if Russian gas is halted.

“Ukraine's position can only be described as blackmail,” said Medvedev.

Kiev, meanwhile, rejected Medvedev's remarks, saying "transportation of Russian gas to Europe was guaranteed".

Ukraine is the main transit route for Russian gas exports to the European Union member-states.

Ukraine owes Russia USD 1.67 billion for gas and USD 450 million in penalties for late payments in November and December.

MVZ/HE/MD