Moscow/Kiev - Kiev asked the European Union to mediate in a standoff with Russia on Thursday after gas export monopoly Gazprom fully cut supplies of Russian gas to Ukrainian consumers, in turn threatening disruptions in deliveries to Europe.

A joint statement signed by Ukrainian President Viktor Yushchenko and Prime Minister Yulia Tymoshenko made public early Thursday morning said their country had asked the EU to mediate the dispute, and promised supplies to Europe would continue "uninterrupted."

Later in the day, the Interfax news agency quoted both as saying they hope to resolve the dispute soon. Tymoshenko said she expected an agreement by January 7, which is Christmas Day in the Russian Orthodox church.

"I am sure that in a few days, we will find a way out of these discussions and reach an understanding with our strategic partners," said Yushchenko, quoted by Interfax.

A spokesman for Gazprom said it had cut 100 per cent of supplies, or 110 million cubic metres of gas per day, meant for Ukraine from 10 am Moscow time (0700 GMT) after last-ditch talks New Year's Eve on a new deal for gas deliveries failed.

"At the current time we have no contract for the deliveries of gas to Ukraine," Sergei Kupriyanov said in a televised press conference.

Supplies to European customers further downstream have been increased to 326 million cubic metres per day, he added.

Ukraine's gas monopoly Naftogaz confirmed it was observing a steady drop in gas pressure, and said it was tapping its gas reserves to make up for the difference, both to domestic and downstream customers.

Limited reserves and a need to protect domestic consumers have forced Ukraine to reduce flow to Europe by a net 21 million cubic meters per day, said Oleh Dubina, chairman of the Ukrainian natural gas monopolist Naftohaz Ukrainy.

Overall supplies to Europe from Russia on Thursday were for practical purposes at normal levels, with a relatively small reduction in flow from Ukraine cancelled by increase flow through Belarus.

Gas supply within Ukraine was normal as well, according to eyewitness reports.

The breakdown in talks between Moscow and Kiev has raised fears of a repeat of 2006, when a similar cutoff caused gas shortages and price spikes in western Europe. Gazprom blamed Ukrainian siphoning off of gas at the time.

Tymoshenko reassured EU Commission President Jose Manuel Barroso on Wednesday that gas transit would continue uninterrupted, but Gazprom accused Naftogaz of "blackmailing" it with threats in talks to seize transits to Europe.

Over 80 per cent of Russian gas exports to Europe pass through Ukrainian pipelines.

The volume of Russian natural gas transiting Belarus, meanwhile, has increased by one-quarter, an official in the country told the Belapan news agency Thursday.

Negotiating positions between the two countries on a new gas contract were still far apart on Wednesday evening. Ukraine rejected a Russian offer for deliveries at 250 dollars per 1,000 cubic metres without a change change to gas shipment tariffs charged by Ukraine for on-shipment to Europe.

The Yushchenko-Tymoshenko statement however said Ukraine could accept a maximum price of slightly more than 200 dollars for Russian gas and a minimum 15 per cent hike in transit fees.

Russian Prime Minister Vladimir Putin on Wednesday called Russia's position "very favorable" for Ukraine, and declared the 250 dollar rate the Kremlin's final offer.

Naftogaz and Gazprom officials on Thursday traded accusations of breaking off talks, blaming their opposites for the Wednesday end to negotiations. Both companies issued statements declaring themselves ready to re-start discussions.

A Thursday declaration from Ukraine's Ministry of Foreign Affairs said Ukraine would transfer European gas westward "in full volume," but added that as far as Kiev was concerned, in the absence of a new gas delivery contract the old one was still in effect.

Ukraine said on Tuesday it paid 1.5 billion dollars in back payments for November and December supplies to RosUkrEnergo, a Swiss- based intermediary gas trader used by Gazprom to supply Ukraine. But Gazprom says the money has yet been transferred to its accounts an claims another 600 million dollars in late-payment fees.

Experts said that full storage sites in Ukraine and within the EU guaranteed downstream supply for the time being. Ukraine alone had 30 billion cubic metres of gas in underground reservoirs, of which 17 billion are owned by the Ukrainian government, said Oleh Dubina, Naftogaz chairman.

If Dubina's estimates are accurate, the reserves would be sufficient for Ukraine to cover its gas needs for some 45 days on its own resources, and for at least three months were a decision taken to siphon gas not owned by Naftohaz.

Ukrainian security officials on Thursday prevented Gazprom auditors attempting to monitor levels of Gazprom-owned gas stored in the Ukrainian reservoir system. Gazprom executives later in the day claimed the inspector ban demonstrated Ukraine already was stealing Russian gas.

Russia supplies about one-quarter of the EU natural gas needs.

Underlying the current impasse are long-standing political black water between Moscow and its former Soviet republic. Tension were aggravated by Ukraine's support for another post Soviet republic Georgia, with which it fought a war in August. The two states have angered Moscow by lobbying for NATO membership. (dpa)