Shares of Russia’s gas giant Gazprom fell on Monday as the long running dispute between Ukraine and Russia over gas prices appeared to ratchet up again.
Sources at Gazprom have told Reuters that as of Friday Ukraine halted Russian gas imports.
They also said that the flow of gas to Europe via Ukraine is so far unaffected.
The reports raised concerns of a new “gas war” breaking out between Moscow and Kiev.
Ukraine has repeatedly complained it is being overcharged and has also said that it does have enough gas in storage to heat the country through the winter.
This all comes just weeks before the former Soviet republic of Ukraine is due to sign an association and free-trade agreement with the European Union – a move that has angered the Russian leadership.
Russia supplies around a quarter of Europe’s gas needs with about half of that transiting through Ukraine.
Countries in central and southeastern Europe, including Italy, get virtually all of their Russian gas supplies via Ukraine.
Any prolonged shutdown of deliveries could hit hard as it did during a gas war in 2009 which left many homes and businesses without heat during freezing winter temperatures.
Ukraine has for years been a politically troubled buffer state between Russia and the European Union, and has used its status as a gas transit corridor to play Moscow off against Brussels.
Now, as Russia builds alternative export routes, Ukrainian President Viktor Yanukovich is seeking a rapprochement with the West even as it struggles to pay its import bill and its public finances become increasingly precarious.
The supply worry comes at a vulnerable moment for Europe, whose second-biggest gas supplier Norway faces production constraints due to refurbishment works on ageing fields this winter.
We learned on Monday that Russian President Vladimir Putin and Yanukovich had met in Moscow during the weekend.
Kremlin spokesman Dmitry Peskov told reporters: “They held talks, comprehensively discussed trade and economic relations of Ukraine and Russia.”
It was not disclosed if the gas situation was discussed.