Gazprom's spokesman Sergei Kupriyanov said that since Ukraine had paid nothing for the gas by Monday Moscow has no legal grounds to supply it to Ukraine any more.
"Gazprom supplies to Ukraine only the amount that has been paid for, and the amount that has been paid for is zero,'' Kupriyanov said Monday morning.
Kupriyanov added that the supply to Europe will continue as planned and Ukraine has the obligation to make sure the gas will reach European customers.
Gazprom said in a statement, however, that it had notified the European Commission of "a possible disruption in the gas transit'' in case Ukraine decides to siphon off the gas.
Cash-strapped Ukraine has been chronically behind on payments for the gas needed to heat homes and fuel its industries.
Gazprom offered the previous president, Viktor Yanukovych, a discounted price of $268.50 per thousand cubic meters after he backed out of an economic and political agreement with the European Union opposed by Russian President Vladimir Putin.
That price was cancelled April 1 and raised to $485 per thousand cubic meters. Russia has now offered $385, but Ukraine insists on the old discounted price. Gazprom has tolerated the late payments but now says Ukraine owes a total of $4.458 billion for gas from last year and this year.
Russian wanted a payment of $1.95 billion for past due bills by 9 a.m. Kiev time Monday. As the deadline passed Gazprom issued a statement that it would start demanding payment in advance for gas.
Ukraine's overall debt to Gazprom is $4.5 billion, the company said on Monday.
The European Commission said in a statement that Ukraine was ready to accept a compromise in talks in Kiev of paying $1 billion now and more later, but Russia was not.
European Union energy official Guenther Oettinger said he was "not pessimistic'' that agreement could eventually be reached.
Russian Deputy Prime Minister Arkady Dvorkovich told Russia news agencies on Monday that the decision on what to do next in relation to Ukraine will be taken following a meeting between Gazprom's CEO Alexei Miller and President Vladimir Putin.