Russian gas company Gazprom has hiked its prices for fuel sold to Ukraine over the weekend, deepening the dispute that resulted in a halting of supplies to Ukraine and disruptions to four other Eastern European countries.

The EU Commission says that there was no immediate danger to gas supplies to European Union industry or households as a result of the Russia-Ukraine gas dispute, while cautioning that the situation could change. On 1 January, Gazprom  shut off gas supplies to Ukraine as a result of a dispute over debts and pricing.

Europe imports around 25 per cent of its natural gas from Russia that is transported through pipelines running through the Ukraine, reports said.

Gazprom had initially offered to a rate of $250 per 1,000 cubic metres to Ukraine, which then countered Russia's offer with its own by asking Russia to pay more to ship fuel to Europe across its territory. Gazprom cutoff supplies on 1 January, having earlier said that its offer had expired. It then asked for a new price of $418 for the same volume.

Within two days, pressure in gas pipelines across Eastern Europe dropped just as it had during a previous pricing dispute between Russia and Ukraine in 2006. Around 30 per cent shortages were reported by Hungary, Romania, Poland and Bulgaria over the weekend.

Sunday saw Gazprom's chief executive Aleksei B Miller hike the demand from Ukraine to $450 per 1,000 cubic metres in January, according to the Interfax news agency.

Gazprom is also asking for $600 million in late fee, while reports tried to guess the price it would demand from Ukraine later in the year. The gas pricing dispute is also reportedly having an adverse impact on Ukraine's economy which is reeling under the impact of the the global financial crisis.

EU customers pay about $500 per 1,000 cubic metres of gas to Russia, even as that price is set to witness a fall in line with falling prices crude oil that tumbled in 2008. Gas price trends typically follow oil prices with a lag of about six months.

Meanwhile, reports said Gazprom is asking the European Union to monitor gas supplies flowing to the EU through Ukraine, citing the need for independent monitors in the wake of Ukraine not allowing Russian staff to monitor gas flows. Some reports said Gazprom was accusing Ukraine of stealing gas that was meant for EU customers.

European energy firms are said to have enough stockpiles of gas to maintain supplies for several days, though reports quoted analysts saying that the colder temperatures could drive faster consumption of the stockpiles and result in problems if the dispute between the two dragged beyond a few days. Gazprom has an export monopoly on Russian gas, and has said that it is hiking its exports to offset some of the shortfall.

The dispute has a political angle to it as well, with Ukraine being at loggerheads with the Kremlin over its ambition to join NATO. It has counter-accused Russia of deliberately cutting flows to Europe, and is asking the European nations to signal to Moscow that it could not bully its "pro-Western" neighbours. Reuters quoted Oleksander Shlapak, a senior Ukrainian presidential aide, as saying "If Europe ... does not help us get out of this situation, then it can expect a more aggressive position from Russia on gas and other issues." Russian ties with the West are yet to recover fully from its war with Georgia in August 2008, with reports suggesting that some policymakers drawing parallels between that conflict and Russia's treatment of Ukraine.