Cutoff highlights Europe's reliance on Russian natural gas

— -- A high-stakes energy dispute between Russia and Ukraine that has left parts of Europe shivering amid a brutal cold snap may be inching toward a settlement.

"I wouldn't be a bit surprised to see it resolved by the end of this week. It's gone too far," says Robert Ebel, a former CIA energy expert.

Both nations, however, continued to trade high-volume attacks over the blame for Wednesday's cutoff of Russian gas shipments through Ukraine to European customers. The episode illuminates Europe's dependence on Russia for one-quarter of its natural gas needs.

Alexander Medvedev, deputy chief executive of Russian gas monopoly Gazprom, said Ukraine's state-owned Naftogaz had closed all export pipelines. But Naftogaz insisted that the Russian claims were "purely provocative" and that Gazprom had halted gas shipments bound for Europe at 7:44 a.m. Kiev time.

Disputes between Russia and Ukraine over natural gas contract terms are an annual ritual. In 2006, a similar clash cut supplies to Europe for three days. This year, the battle started Jan. 1, when Russia trimmed gas flows.

At issue: about $614 million that Gazprom claims Ukraine owes for penalties and Gazprom's demand for sharply higher prices on future sales. The commercial bargaining is taking place against a backdrop of political tension between Russia and Ukraine, once part of a Soviet empire ruled from Moscow and now a potential NATO member.

Anders Aslund, an economist at the Peterson Institute, says Russia aims to destabilize Ukraine and stir nationalist fervor at home. "The Russians have been spoiling for a fight," he said.

Hardest hit by the gas shortfall have been countries in the Balkans and Eastern Europe. In Bulgaria, an estimated 45,000 households were without central heating.

Slovakia declared a state of emergency while the Croatian government expressed alarm.

After a similar gas cutoff in 2006, major European nations increased their gas stockpiles as insurance against a repeat.

Gazprom said it is taking "every single step" to meet its supply commitments by using alternative westbound pipelines. But it delivered just 170 million cubic meters of gas to Europe on Wednesday vs. the normal midwinter volume of 450 million cubic meters. Eighty percent of the Russian gas Europe buys travels across Ukraine.