RIA Novosti citing Mr Alexei Miller CEO of Gazprom as saying that Ukraine in June bought just a third of the gas stipulated in contracts 1.1 billion cubic meters instead of 3.4 billion but will face no penalties.

Mr Alexei Miller said the Russian energy giant and Ukraine's national oil and gas firm Naftogaz agreed at talks on Friday that although the contracts had not been fulfilled, no penalties would be imposed. He said that Naftogaz will start to pump more Russian gas from July amid falling gas prices with plans to buy similar volumes in August and September.

Mr Viktor Yushchenko Ukrainian President said that Naftogaz was USD 2 billion short of the required funds needed to pump natural gas into its underground storage systems to prepare for winter. But Gazprom's CEO said Ukraine's Naftogaz had assured the Russian energy giant that there would be no problems with payments for gas supplies in June.

Mr Alexei Miller said "We have received assurances from Naftogaz that there will be no problems with payment."

Russian authorities have repeatedly voiced concerns that Ukraine will not have enough money to pay for gas supplies, which would cause difficulties for Russia and European gas consumers. The next payment is due on July 7.

(Sourced from RIA Novosti)