Moscow cut deliveries to Ukraine on New Year’s Day blaming lack of progress on a new contract. Ukraine though remains optimistic.

“I think we are close to a compromise decision and I would like the Russian president and Russian prime minister, as well as the Ukrainian side taking part in the talks with the people at Gazprom, to do everything they can to complete these talks as soon as possible,” said President Viktor Yushchenko.

The Russian gas giant Gazprom has proposed a new contract, at 250 dollars per thousand cubic meters of gas. But Kiev says that is too much.“At the moment we do not have a contract to supply gas to Ukraine, therefore we do not have any reason to supply gas to them,” said Gazprom’s Sergei Kupriyanov.

Europe gets much of its gas from Russia, supplies piped through Ukrainian territory. Moscow insists EU supplies will not be affected, but there are worries that Kiev will simply siphon off the gas it needs, reducing the amount heading to consumers in the West.