A spokeswoman in Berlin on Thursday said Steinmeier urged the two countries to try "intensively and constructively" to obtain an agreement, telling them that a compromise satisfying both sides must be possible.

He also told Russian Foreign Minister Sergey Lavrov and his Ukrainian counterpart Vladimir Ogrysko that Berlin expected the two nations to fulfil their contractual obligations to pump and provide gas for western Europe.

Both ministers assured Steinmeier this would happen, the spokeswoman said.

German gas suppliers said they foresaw no shortage of gas in Germany, western Europe's biggest gas importer.

"Our customers can count on reliable deliveries," said Martin Weyand, chief of the BDEW German utilities federation.

He said Germany did not rely only on pipelines through Ukraine to receive Russian natural gas, but also on transit via Belarus. In addition, Norway, Britain and the Netherlands supply Germany with gas from offshore fields. He also said Germany held large gas stocks.

Kiev urges EU mediation

A joint statement signed by Ukrainian President Viktor Yushchenko and Prime Minister Yulia Tymoshenko made public early Thursday morning said their country had asked the EU to mediate the dispute with Russia, and promised supplies to Europe would continue "uninterrupted."

A spokesman for Gazprom said it had cut 100 percent of supplies, or 110 million cubic meters of gas per day, meant for Ukraine from 10 am Moscow time (0700 GMT) after last-ditch talks New Year's Eve on a new deal for gas deliveries failed.

"At the current time we have no contract for the deliveries of gas to Ukraine," Sergei Kupriyanov said in a televised press conference.

Supplies to European customers further downstream have been increased to 326 million cubic meters per day, he added.

Ukraine's gas monopoly Naftogaz confirmed it was observing a steady drop in gas pressure, and said it was tapping its gas reserves to make up for the difference, both to domestic and downstream customers.

EU reluctant to get involved

The EU, however, seemed hesitant about getting involved. Speaking on Czech Television, the new EU head, Czech Prime Minister Mirek Topolanek, said that the EU was reluctant to broker the bilateral gas dispute.

"It is pretty much a Russian-Ukrainian dispute and it has to be solved as such," Topolanek said.

"We will appeal on both parties to reach an agreement as it is not advisable to get involved in the conflict because no one is fully familiar with those contracts," he said.

Limited reserves

Limited reserves and a need to protect domestic consumers have forced Ukraine to reduce flow to Europe by a net 21 million cubic meters per day, said Oleh Dubina, chairman of the Ukrainian natural gas monopolist Naftohaz Ukrainy.

Overall supplies to Europe from Russia on Thursday were for practical purposes at normal levels, with a relatively small reduction in flow from Ukraine cancelled by an increased flow through Belarus.

Gas supply within Ukraine was normal as well, according to eyewitness reports.

The breakdown in talks between Moscow and Kiev has raised fears of a repeat of 2006, when a similar cutoff caused gas shortages and price spikes in western Europe. Gazprom blamed Ukrainian siphoning off of gas at the time.

Tymoshenko reassured EU Commission President Jose Manuel Barroso on Wednesday that gas transit would continue uninterrupted, but Gazprom accused Naftogaz of "blackmailing" it with threats in talks to seize transits to Europe.

Over 80 percent of Russian gas exports to Europe pass through Ukrainian pipelines.

Tough negotiations

Negotiating positions between the two countries on a new gas contract were still far apart on Wednesday evening. Ukraine rejected a Russian offer for deliveries at $250 (179 euros) per 1,000 cubic meters without a change to gas shipment tariffs charged by Ukraine for on-shipment to Europe.

The Yushchenko-Tymoshenko statement, however, said Ukraine could accept a maximum price of $201 dollars for Russian gas and a minimum 15-percent hike in transit fees.

Russian Prime Minister Vladimir Putin on Wednesday called Russia's position "very favorable" for Ukraine, and declared the 250 dollar rate the Kremlin's final offer.

Naftogaz and Gazprom officials on Thursday traded accusations of breaking off talks, blaming their opposites for the Wednesday end to negotiations. Both companies issued statements declaring themselves ready to re-start discussions.