Jan. 7 (Bloomberg) -- Russian natural-gas exports through Ukraine to Europe halted for the first time in three years, threatening to create shortages as freezing weather spurred demand for power.

The two sides blamed each other for the disruption. OAO Gazprom, Russia’s gas-export monopoly, cut off all gas supplies to Europe through Ukraine at 7:44 a.m. Kiev time today, according to Ukrainian utility NAK Naftogaz Ukrainy. Gazprom Deputy Chief Executive Officer Alexander Medvedev said Ukraine shut off a fourth pipeline after closing three others yesterday.

The move, stopping all deliveries to Austria, the Czech Republic and Slovakia, came after a halt in supplies to the Balkans yesterday and cuts to other countries. The dispute has already spread further and lasted longer than a similar conflict in 2006 which interrupted shipments to Europe.

“Gazprom risks increasing negative publicity,” said Igor Kurinnyy, an oil and gas analyst with ING Groep NA. “What matters is that European customers are facing disruption.”

Gazprom is ready to talk to Ukrainian officials “day or night” to find a solution, Medvedev told reporters in Berlin today. The exporter had threatened late yesterday to cut supplies if Ukraine held up fuel meant for customers in central and western Europe.

U.K. natural gas for February delivery rose 2.2 percent to 61.5 pence a therm as of 11:30 a.m. in London, according to prices from ICAP Plc. That’s equivalent to $9.13 a million British thermal units. A therm is 100,000 Btus. Yesterday, same- day gas in the U.K. surged as much as 27 percent.

Full Capacity

Poland is receiving no gas from Russia via Ukraine, Malgorzata Polskowska, a spokeswoman for national gas pipeline operator Gaz-System SA, said by phone from Warsaw today.

Polskie Gornictwo Naftowe i Gazownictwo SA, the country’s largest natural-gas company, said supplies of the fuel from Russia and other former Soviet states have dropped to 84 percent of normal levels.

Eni SpA, Italy’s biggest energy company, said it registered a “substantial” interruption in gas supplies from the TAG pipeline starting at 1 a.m. local time today.

Hungary ordered industrial users of natural gas to switch to other fuels, a day after it stopped receiving Russian supplies through Ukraine, according to Janos Zsuga, head of Mol Nyrt.’s gas-transmission unit. The order affects companies that use more than 500 cubic meters of gas an hour, Zsuga said today in an e-mailed statement.

Full Capacity

Norway, the biggest supplier of gas to the European Union after Russia, is producing natural gas at “more or less” full capacity and can do little in the short term to increase output, Deputy Petroleum and Energy Minister Liv Monica Stubholt said.

OMV AG, Austria’s largest oil and gas producer, said it’s able to meet demand by tapping stockpiles, sourcing imports from elsewhere and using its own output, the Vienna-based company said in an e-mailed statement.

The Czech Republic’s RWE Transgas is using supplies from Norway and underground storage, the gas trader said today in an e-mailed statement. It has also secured extra gas in cooperation with German parent company RWE AG, which is arriving via the northern route along with the Norwegian imports.

RWE, Germany’s second-largest utility, said its gas clients won’t experience any disruption in supply. The company sources about 80 percent of its gas from and through other countries and storage is “well-filled,” spokeswoman Annett Urbaczka said by telephone today.

Diversified Sources

Since a similar dispute in January 2006, European nations have diversified their sources of fuel and improved inventories. They are also using more gas, the source of 24 percent of the world’s energy consumption last year, to reduce emissions linked to global warming.

Naftogaz Chief Executive Officer Oleh Dubina said he would return to Moscow tomorrow to resume talks. In 2006, Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the European Union, and also cut shipments by 50 percent last March during related debt claims.

“If Ukraine fully stops delivery of gas to the west, for consumers in central and western Europe, we do not see sense in supplying gas to the border with Ukraine,” Gazprom Chief Executive Officer Alexei Miller said late yesterday. Miller said Gazprom would hold talks with European partners in Brussels tomorrow.

Repair Work

A halt in gas flowing through Russia’s export pipeline system with Ukraine may create ‘‘hydrate blocks’’ which could require “serious” repair work, Medvedev told Russian state television today.

Naftogaz spokesman Valentyn Zemlyanskyi said Gazprom cut shipments to Europe through Ukraine yesterday to 74 million cubic meters a day, compared with about 300 million normally.

As the dispute intensified, Arctic air from Siberia pushed into Central Europe, northern France, Italy and parts of the U.K., bringing snow and temperatures as low as minus 25 degrees Celsius (minus 13 degrees Fahrenheit) in parts of Germany.

Russia, which supplies a quarter of Europe’s gas, cut shipments intended for Ukraine’s domestic market on Jan. 1, and accused Ukraine of siphoning off gas destined for other buyers. Gazprom has warned that Ukraine risks amassing a debt of “billions of dollars” if the conflict continues.

Slovensky Plynarensky Priemysel AS, Slovakia’s dominant gas company, said it would curb deliveries to the largest industrial users. Affected companies include refiner Slovnaft AS, which consumes more than 1 million cubic meters of gas a day, spokeswoman Kristina Felova said by telephone.

‘Big Problem’

“The former Soviet bloc countries are between the devil and the deep blue sea,” James Nixey, manager of the Russia and Eurasia Program at London-based foreign policy research institute Chatham House, said by phone. “They are reliant on Russian energy more than Western countries and that’s a big problem because they are desperately trying to break free, but then the reality is that they just can’t.”

Czech Prime Minister Mirek Topolanek, whose country holds the revolving presidency of the EU, said the dispute between Russia and Ukraine on gas prices is becoming “more serious” and the effects are spreading across Europe.

Other countries can’t be “held hostage” by Russia over gas supplies, Topolanek told reporters in Prague yesterday. Ukraine may have to compromise on gas fees, he added.

Raised Demands

Gazprom raised its demands on Jan. 4 as Miller cited a possible price of $450 per 1,000 cubic meters for deliveries to Ukraine this month, reflecting the average price in countries bordering Russia’s neighbor. Ukraine paid $179.50 for its Russian gas last year and says $201 would be fair in 2009.

Ukraine’s political leaders, President Viktor Yushchenko and Prime Minister Yulia Timoshenko, are grappling with a financial crisis that has forced it to seek a $16.4 billion International Monetary Fund bailout.

Gazprom’s Medvedev said yesterday in London that the company is working to diversify its export routes to Europe, including two planned pipeline projects that bypass Ukraine.

The Nord Stream link, in which Gazprom owns 51 percent, is planned to run from Russia via the Baltic Sea to Germany. South Stream, where Eni is a partner, will run from the Black Sea to Bulgaria, where it will split into a southern route to Italy and a northern route to Austria.

To contact the reporters on this story: Lyubov Pronina in Moscow on lpronina@bloomberg.net; Daryna Krasnolutska in Kiev on dkrasnolutsk@bloomberg.net

Last Updated: January 7, 2009 06:35 EST