Ukraine Crisis: Putin Tells Gazprom to Back Off Gas Payment Demands

Russian President Vladimir Putin has spoken out against Gazprom's plans to charge Ukraine up front for its gas bill.

Putin told the state-controlled energy giant to hold off on its demands for advance payments from the Ukrainian government. Instead, he added, the company should consult with the Ukrainian interim government.

"Taking into account the complex situation in Ukraine and the fact that we have not yet finished talks with the EU, I would ask Gazprom and the government to hold off on such a possibility," Putin said.

Meanwhile, Russian Prime Minister Dmitry Medvedev seemed to offer conflicting advice when he told a government meeting that there were grounds to switch Gazprom's arrangement with the Ukrainian government to an upfront payment system.

Relations between Russia and the West deteriorated after Ukraine's former president Viktor Yanukovych was ousted from office in February. The row escalated when Russia annexed the Crimea region after a disputed referendum in March.

The European Union and the United States reacted by imposing economic sanctions on a number of individuals with links to the Kremlin, which prompted Gazprom to pursue Kiev for payments.

Since then, the two sides have been locked in a bitter dispute over unpaid gas bills amounting to $2.2bn (£1.3bn, €1.6bn) and the price that Kiev pays for gas.

Kiev saw the price it has to pay for gas almost double to $485 per 10,000 cubic metres last week. The move decried as "economic aggression" and "political prices" by Ukrainian interim Prime Minister Arseniy Yatseniuk.

Meanwhile, Gazprom imposed a deadline of midnight on Monday for Kiev to pay the $2.2bn it owes in back dated gas bills. The deadline lapsed without any payments being made. Putin's comments are the first comments from any senior Russian officials since then.