The agreement requires both sides to notify the other of any likely disruption to supplies of oil, natural gas or electricity and to cooperate on finding a solution. Third parties would also be allowed to participate, the European Commission said.

"An energy crisis like the one the EU suffered in January is harmful for supply, transit and consuming countries alike," EU Energy Commissioner Andris Piebalgs said after signing the agreement with Russian Energy Minister Sergei Shmatko.

"We need to do everything necessary to make sure that such a situation never happens again," he continued.

A fifth of Europe's gas comes from Russian via Ukraine, and this supply was stopped for over two weeks in January due to a quarrel between Moscow and Kiev.

Unpaid bills

Concerns are growing that the dispute could be repeated this January, when Ukraine holds presidential elections. The election will be a showdown between Ukrainian president Viktor Yushchenko and Prime Minister Yulia Tymoshenko, Russia's favored candidate.

Tymoshenko said the country had struggled to pay its latest monthly gas bill to Russia. Fears are growing that Russia could try to use the gas issue to influence the election.

Russian Prime Minister Vladimir Putin also warned last week that Moscow would cut off deliveries should Ukraine siphon off, for its own use, natural gas crossing its territory en route to Europe.

Not just a red phone

Russia's Energy Ministry said in a separate statement that the "early warning" mechanism would maintain a clear line of communication between Moscow and Brussels, as well as the means by which to react to unexpected supply disruptions.

"It's not just a red phone connecting Moscow and Brussels," Vladimir Chizhov, Russia's ambassador to the European Union, told reporters on Friday ahead of the signing.

"It's a network of commitments which, of course, includes prompt information of any disruptions to our energy links, be it through technical failures, or natural disasters, or somebody turning off the supply or somebody diverting the energy flow."

But EU energy commissioner Piebalgs also ruled out extending a loan to Ukraine to help Kiev pay for Russian gas, a demand made by Putin in recent weeks.

"We hope ... transit systems won't be closed and there will be no interruption to gas supplies," Piebalgs said.

"I hope that they (Ukraine) will pay for gas," he said. "The possibility of giving Ukraine a loan is ruled out."

bk/Reuters/AFP

Editor: Kyle James