Russia's Gazprom yesterday threatened to reduce supplies to Europe next year unless Ukraine agrees to pay market prices for its gas. Ukraine takes some gas Russia exports via pipeline in lieu of transit payments.

Alexander Medvedev, the Gazprom executive in charge of exports, said that if no agreement was reached by the new year, Gazprom would limit the volume of gas crossing the Russia-Ukraine border from January 1 to the amount contracted by its other European customers and excluding any portion for Ukraine.