Europe was preparing itself on Tuesday night for possible reductions in gas supply as Gazprom halved shipments to Ukraine and warned it could make further cuts if an escalating energy standoff over unpaid debts was not resolved.

Gazprom, Russia’s state-controlled gas group, said yesterday it had been forced to make additional cuts after an initial 25 per cent reduction in supply on Monday failed to bring Ukraine back to the negotiating table over $600m (£302m, €395m) in gas debts.