MOSCOW/KIEV (Reuters) - Russia’s gas giant Gazprom (GAZP.MM[1]) said on Saturday it had started moves to terminate gas supply contracts with Ukraine’s Naftogaz, though Kiev said there had so far been no impact on supplies through its pipelines to Europe.

FILE PHOTO: A general view shows the headquarters of Russian gas giant Gazprom in Moscow, Russia June 30, 2016. REUTERS/Maxim Shemetov/File Photo

Gazprom’s announcement marked an escalation in a long-running dispute between Moscow and Kiev, which has left Ukraine struggling to stay warm and which the EU said could threaten gas flows across the continent.

The Russian group said on Friday it intended to terminate the contracts after a Stockholm arbitration court ordered it this week to pay more than $2.5 billion to Ukrainian energy firm Naftogaz.

Gazprom deputy CEO Alexander Medvedev said on Saturday the group had started a procedure at the same court to make the terminations - though he was sure different arbitrators would handle the new case.

“We have started the procedure of terminating contracts with Ukraine’s Naftogaz,” Medvedev said.

Ukraine’s state-owned gas pipeline operator Ukrtransgaz said on Saturday it had had to take additional measures to ensure gas transit to European customers.

Ukrtransgaz spokesman Ihor Kravchyshyn said it had faced“a critical situation” as Russia had kept pressure at the point connecting to the Ukrainian pipeline system at a low level - at least 20 percent below that required by transit contracts.

Ukrainian President Petro Poroshenko said on Saturday Ukraine saw an increase in gas supplies from Poland, Slovakia, and Hungary, which has fully offset the impact from Gazprom’s decision.

Gazprom had intended to resume gas supplies to Ukraine from March for the first time since late 2015 when Kiev started buying gas from Europe to try to cut its energy dependence on Moscow. But the Russian group canceled that plan on Friday.

Reporting by Vladimir Soldatkin in Moscow and Natalia Zinets in Kiev; Writing by Andrey Ostroukh; Editing by Andrew Heavens

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  1. ^ GAZP.MM (www.reuters.com)
  2. ^ The Thomson Reuters Trust Principles. (thomsonreuters.com)

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