Russia has started cutting off gas supplies to Ukraine after Kiev refused to pay the increased amounts Moscow is demanding.
Russian news agencies said the state-controlled company Gazprom began reducing pressure in the pipeline to its ex-Soviet neighbour, even before the deadline.
The move has raised fears that deliveries to other countries could be affected.
It comes on the day Russia makes its debut as chairman of the Group of Eight industrialized nations. One of the main themes of its tenure will be the security of energy supply.
Ukraine has in the past received heavily discounted gas from Russia but Gazprom wants to bring payments in line with world market rates by more than quadrupling the price.
Last minute efforts to resolve the dispute failed.
They included an offer by Russian President Vladimir Putin to postpone the price rise until April if Ukraine agreed to the new terms. A Gazprom spokesman said that offer was rejected.
The firm supplies 25 per cent of western Europe’s gas – much of it via Ukraine. Gazprom maintains deliveries to the EU will not be affected. Relations between Kiev and Moscow have been strained since mass protests helped propel Viktor Yushchenko to a presidential election victory – beating a Kremlin-backed candidate.
Ukraine’s western-leaning government complains Russia is using its control over energy resources as a political weapon – something Moscow denies.