MOSCOW - FRENETIC efforts to resolve another gas dispute between Russia and Ukraine went down to the wire on Wednesday within hours of a threatened New Year's Day cut-off that could disrupt deliveries to Europe.

The dispute showed signs of easing as Ukraine claimed it had paid arrears for imported gas that Russian state-run gas giant Gazprom had demanded and said it wanted to sign a fresh contract for 2009 gas purchases quickly.

Ukraine's state gas firm Naftogaz said on Wednesday it had received bank confirmation that the US$1.52 billion (S$2.18 billion) it transferred to Gazprom late the previous evening had been deposited into the intended account.

'The money was transferred' and the intended recipient 'confirmed receipt of the funds in the account,' Ukrainian television reported.

Gazprom however, which warned on Tuesday that it was 'too early' to say the current crisis had been resolved, was silent on the dispute on Wednesday but was scheduled to hold a news conference at 2.00pm (1100 GMT, 7pm Singapore time).

The Russian company has demanded that Ukraine pay more than US$1.6 billion for its November-December gas imports as well as another US$450 million dollars.

There were conflicting signals from Ukraine on how it planned to pay its debts: Naftogaz said it made a US$1.52 billion bank transfer to pay for its consumption - more than US$100 million dollars short of what Gazprom demanded.

It also said that the issue of late fees would be handled separately, only after all accounts were settled on the November-December deliveries.

At the same time however, a directive issued by the government of Ukraine and obtained by AFP promised payment of 'up to two billion US dollars' on the gas debt - an amount more or less in line with the total demanded by Gazprom.

Russian President Dmitry Medvedev, Prime Minister Vladimir Putin and other top Russian officials have demanded that Ukraine pay its debt 'in full' - imports and penalties - or have gas supply from Russia turned off Jan 1.

Officially, Russia argues that the threatened cut-off is a purely commercial matter: Ukraine must pay its bills - and even Kiev does not dispute the arrears for November-December imports - or else do without Russian gas.

Privately however, Russian policymakers continue to cite reports that Ukraine provided direct military assistance to Georgia in its war last August with Russia as a factor in Moscow's dealings with Kiev on the gas issue.

Ukrainian and European officials have downplayed any immediate implications of a Russian gas cut-off, saying that, in contrast to a similar dispute two years ago, they have sufficient reserves to get through the winter this time.

The countries of the European Union are heavily reliant on Russia for their natural gas supplies - around one quarter come from Russia, which possesses the world's largest known reserves.

The pipeline network linking Russian supply with consumers in Europe however transits through Ukraine and was conceived and built at a time when Russia and Ukraine were united in a single country - the Soviet Union.

To this day, Ukraine pays far less to purchase natural gas from Russia than do clients further downstream in Europe.

Mr Putin has most succinctly articulated the Russian argument however that Gazprom has no obligation to continue selling gas to Ukraine, a sovereign and independent state, at highly-discounted prices.

He has said that if the West wants Ukraine to continue receiving gas at subsidised prices then it should pay those subsidies. -- AFP