Moscow - Russian Prime Minister Vladimir Putin said Moscow had offered and kiev had refused the "very favorable" price of 250 dollars per 1,000 cubic metres, or 40 per cent more, for gas next year.

Putin made the comments in a televised speech as talks with Ukranian officials in Moscow over non-payments and the pricing dispute came down to the wire, increasing the likelihood Gazprom would cuts gas from January 1.

Russian gas giant Gazprom has said it will cut gas supplies to Kiev starting at 10 am (0700 GMT) on January 1 if a 2 billion dollar debt is not paid by midnight.

"We think that none of our partners should be placed in a position that they can no longer pay for goods," Putin said.

He called the 250-dollar price per 1,000 cubic metres of gas a "humanitarian gesture," saying Kiev would be paying 380 dollars at market price.

Ukraine currently pays far less for gas than European clients further downstream, 179.5 dollars per 1,000 cubic metres.

He also said "grave consequences" would come from any attempt by Ukraine to annul a contract Russian export monopoly Gazprom for gas transits to Europe.

Putin said the Ukraine had threatened in an "absolutely ill- advised" move to seize Russian gas transits meant for Europe customers - a move Gazprom deputy chief executive Alexander Medvedev called sheer "blackmail."

Europe receives roughly one-quarter of its natural gas from Russia, over 80 per cent of those supplies are exported via Ukrainian pipelines. (dpa)