Jan. 1 (Bloomberg) -- Russia's OAO Gazprom cut off natural gas supplies to Ukraine after the country refused to pay more than four times 2005's rate for the fuel, deepening tensions between the two former Soviet republics.

State-run Gazprom, which supplies a quarter of Ukraine's gas and uses the country's pipelines to supply a quarter of western Europe's, began to shut off supplies to Ukraine at 10 a.m. local time today, Sergei Kupriyanov, a spokesman for the Moscow-based company, said on its NTV television network. "The Ukrainian side is to blame for this. They rejected our offer.''

Ukraine has enough fuel stored to last four months, and both sides have said supplies to western Europe won't be affected.

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