In Sofia, Bulgaria, hampered by the gas dispute between Russia and Ukraine, commuters rode in an unheated tram on Thursday. The European Union said gas should flow again soon.

The agreement means that gas supplies could resume soon, perhaps as early as Friday, or more likely over the weekend, if no further hitches arise.

Russia cut off all gas deliveries through Ukraine on Wednesday after the dispute escalated, leaving European countries like Bulgaria shivering during a bitter January cold snap.

Ukraine said it would allow Russian experts to join the European Union mission to monitor gas flow through the country, The Associated Press reported from Kiev.

Valentyn Zemlyansky, spokesman for Ukraine’s state gas company Naftogaz, said members of the European Union mission would tour gas pumping stations together with the Russian experts, the A.P. reported, adding that the European Union monitors were expected to arrive in Kiev on Friday.

Russia has said it would restore supplies of natural gas through Ukraine if its officials were included in a monitoring mission.

The European Union said Thursday that gas supplies to the Continent should start flowing shortly after a deal was completed.

“This deployment should lead to the Russian supplies of gas to E.U. member states’ being restored,” the Czech government, which holds the rotating presidency of the European Union, said in a statement, The Associated Press reported.

Russia cut off the flow of gas on Tuesday as part of a pricing dispute with Ukraine, creating shortages in many European countries. The impact of the gas cuts was felt most severely in southeastern Europe, where hundreds of thousands of people in Serbia, Bosnia and Bulgaria were without heat.

Russia, which first cut off gas shipments just for Ukraine, on Wednesday cut off all gas exports to Ukraine, including those destined for Europe, saying Ukraine was diverting some gas for its domestic use.

The pricing dispute centers on Russia’s desire to sharply raise the price for the gas it sells to Ukraine, as well as Ukraine’s desire to raise the fees that it charges Gazprom to ship gas to the European Union. Gazprom is seeking to raise the price Ukraine pays for gas to $450 per 1,000 cubic meters from $179.50 last year. Ukraine has reportedly offered a little more than $200 per 1,000 cubic meters. Russia also wants to collect what it says are fines for late payments on previous shipments.

Gazprom halted all shipments to Ukraine for domestic use on Jan. 1, then stopped gas exports for transshipment through Ukraine on Wednesday, saying its western neighbor was taking gas from the pipeline meant for European customers. The cutoff left Ukraine and 17 other countries in Europe facing either no new gas supplies or a sharp reduction in the middle of winter.

In a European parliamentary committee hearing on Thursday, Evgeni Kirilov, a member from Bulgaria, which depends almost completely on Russia for its gas, said he could not understand “how two of the biggest countries in Europe can be so uncivilized and irresponsible.” He added: “We are hostage to this irresponsibility.”

Mr. Putin blamed Ukraine’s leaders for the shutoff and suggested they were unwilling to cut out a middleman company, RosUkrEnergo, owned by a business ally of the Ukrainian president, Viktor A. Yushchenko. Mr. Putin said he suspected some politicians of seeking to use proceeds from gas “as financial resources in future political campaigns.”

Speaking on Russian television on Thursday, Mr. Putin offered to raise the transit fees that Russia pays to ship gas across Ukraine, saying the two countries needed to shift, “as quickly as possible to a market relationship.” In exchange for a market rate for gas, he said, Russia would pay transit fees of $3 to $4 for each 1,000 cubic meters transported 100 kilometers, or 62 miles. Gazprom last year paid Ukraine $1.60 and had said it would pay $1.70 this year.

While there are political overtones to the dispute, most experts attribute it primarily to commercial interests. “The genesis of this is in Russia’s move away from barter agreements with the former Soviet republics toward market prices,” Andrew Neff, an energy analyst at IHS Global Insight in Ankara, Turkey, said. “You can blame either one, but both sides seem to have shot themselves in the foot.”

Several countries are relying on their own limited reserves of gas

The two sides have blamed each other for halting gas flows.

Ukraine’s Naftogaz said Russia’s Gazprom halted supplies at 0744 local time (0544 GMT). Gazprom said Ukraine had closed the last remaining pipeline.

The EU depends on Russia for about a quarter of its total gas supplies, some 80% of which is pumped through Ukraine.

The list of countries that have reported a total halt of Russian supplies via Ukraine includes Romania, the Czech Republic, Slovakia, Bosnia-Hercegovina, Bulgaria, Croatia, Greece, Hungary, Macedonia, Serbia, and Austria.

Italy said it had received only 10% of its expected supply.

The row comes amid a cold snap across Europe that is likely to push up demand for gas.

Bulgaria says it has sufficient supplies for just a few more days.

Many other countries are now tapping strategic reserves, built up to cope with just such a development, says the BBC’s Europe correspondent Nick Thorpe.

Power stations have been told to switch to fuel oil where possible, while big industrial users have been told to prepare to limit or halt use.

Some 12,000 households in the eastern Bulgarian city of Varna had been left without central heating, authorities said. Nearby Dobrich was also affected.

In many former Soviet bloc countries whole towns and areas rely on a single centralised heating system, so that when that shuts down, every household is affected.

Hungary’s gas transmission company said it had limited the natural gas consumption for industrial users on Wednesday, while Budapest airport was switching from gas to oil heating, Reuters news agency reported.

Hungary expects to use 64m cubic metres of gas on Wednesday, down from 68m cubic metres, the company said.

Venting anger

Russia and Ukraine have been blaming each other for the disruption to Europe’s energy supplies.

Gazprom has accused Ukraine of shutting off the final pipeline carrying gas to Europe, but the Ukrainian gas company has said that would be impossible, since the taps are in Russia.

Correspondents say the differing versions offered by the two countries show how far apart they are, and that the row is rapidly becoming a means for venting anger caused by poor political relations.

Talks between Naftogaz and Gazprom aimed at resolving the crisis are due to resume in Moscow on Thursday – after the Christmas public holiday on Wednesday in Russia and Ukraine.

Gazprom will also discuss the matter with the EU on the same day.

The European Commission has demanded that gas supplies to the EU are immediately restored.

‘Theft increasing’

Russia stopped supplying gas to Ukraine on New Year’s Day in a row about unpaid bills and the failure to agree a new pricing contract.

On Monday, Gazprom decided to cut exports through Ukrainian pipelines by a fifth to compensate for the amount it said Ukraine was siphoning off supplies intended for Europe for its own use.

Gazprom has said Ukraine was stealing 15% of gas delivered across its borders and that theft was “increasing by the hour”.

On Wednesday Gazprom deputy chief executive Alexander Medvedev said there was no “physical possibility” of Russia bringing gas to European customers because of the shutdown of pipes going though Ukraine.

He also warned that in cold weather gas needed to flow through the pipes to keep them operational, and that failing this, “the system could not be restarted very quickly”.

Ukraine has denied stealing gas, saying technical problems are disrupting the onward flow of gas to Europe.

Ukrainian President Viktor Yushchenko said in a letter to Russian President Dmitry Medvedev and European Commission President Jose Manuel Barroso that his country had not used “a single cubic metre of Russian gas” to meet its own needs.

The new EU member states in central and eastern Europe are heavily – and in some cases entirely – dependent on Russian gas imports.

However, Germany and Italy together account for nearly half of the Russian gas consumed in the EU.

Gazprom has promised to pump extra supplies through other pipelines – the Yamal from Arctic Russia through Belarus to Germany, and the Blue Stream to Turkey under the Black Sea.

A similar row between Gazprom and Ukraine at the beginning of 2006 led to gas shortages in several EU countries.

Much of the EU's gas from Russia arrives via Ukraine

Russia’s gas giant Gazprom said it turned off the taps at 0700 GMT, when its contract to supply Ukraine ended.

Ukraine insists it has paid off its debts to Gazprom, but Russia contests this. The two countries have also failed to agree on a price for 2009.

The EU urged Russia and Ukraine to resume negotiations and not to let the dispute disrupt supplies to Europe.

A similar row between Gazprom and Ukraine at the beginning of 2006 led to gas shortages in several EU countries.

Pipes across Ukraine carry about a fifth of the EU’s gas needs.

The new holders of the EU presidency, the Czech Republic, urged the parties to “rapidly reach a successful outcome” to their dispute.

“All existing commitments to supply and transit must be honoured,” it added.

Both Russia and Ukraine insist that gas supplies transported via Ukraine to the European Union will continue as normal.

An official at Gazprom’s headquarters in Moscow said: “We have fully cut off supplies to Ukraine as of 10am (0700 GMT) today.”

“Usually we supply 390 million cubic metres per day, of which 300 million is transit gas for Europe. Today supplies are running at 300 million cubic metres. We continue supplying Europe in full,” Reuters quoted him as saying.

Ukraine’s state energy firm Naftogaz confirmed that supplies had dropped off steadily, and said it would start pumping gas from its reserves.

Ukraine says it has built up enough reserves to see it through the next few months.

‘Eager for conflict’

“The debt to Gazprom for gas supplied earlier was not paid. Despite verbal statements from Kiev, Gazprom did not see any money in its account,” said Gazprom’s chief executive Alexei Miller said.

He criticised Ukraine’s stance during the negotiations as “unconstructive”, and said Gazprom had no legal reason to continue supplying gas to Ukraine.

Mr Miller said the contract to supply gas depended on the full settlement of £2bn in gas bills and late-payment fines levied by Gazprom.

He also suggested that Kiev was seeking to provoke a wider dispute, saying he was “forming the impression that there are political forces in Ukraine which are very eager to see a gas conflict between our two countries”.

Naftogaz said it has paid $1.5bn (£1bn) in outstanding bills to RosUkrEnergo – a Switzerland-registered gas trading company which is acting as an intermediary – but not the fines imposed by Gazprom.

Gazprom is the world’s largest gas producer and supplies a quarter of the European Union’s gas needs – and 42% of its imports. Most of that is transported via Ukraine.

Russia’s Vladimir Putin had earlier warned Ukraine not to disrupt the transit of gas to Europe.

He warned of “very severe consequences” for Ukraine in terms of its relations with both Russia and European countries.

Mr Putin said Gazprom had been generous in offering Ukraine a price of $250 per 1,000 cubic metres of gas in 2009, given that the price in Europe was currently more than $500.

He said he understood that Ukraine was in “a difficult economic situation” which was worse than Russia’s, but put the dispute down to a “war of the clans” between the Ukrainian Prime Minister, Yulia Tymoshenko, and President Viktor Yushchenko.