MOSCOW, January 1 (RIA Novosti) - The price dispute between Russia's Gazprom and Ukraine would be settled when contracts on supplies and transit in 2006 have been signed, a spokesman for the Russian energy concern said Sunday.

Sergei Kupriyanov thereby responded to a statement made by Ukraine's national gas company Naftogaz that said Sunday it had accepted Gazprom's demands discussed December 31.

"We believe agreement will be reached when contracts to last throughout 2006 have been signed," Kupriyanov said. "But Naftogaz was only willing to agree to separate parameters for Q1 2006 indicated in the [new] contract."

Gazprom cut off gas supplies to Ukraine this morning as the two countries had failed to settle their price dispute before January 1, the deadline announced by the energy giant.

Ukraine has resisted Gazprom's decision to raise gas prices to a market level of $230 per 1,000 cu m, or more than fourfold, claiming it was "economically ungrounded" and politically motivated. The country has also insisted that it is entitled to 15% of natural gas flowing via its territory to European markets.

Gazprom said it would qualify tapping as theft and would seek prosecution. The concern, which is lifting the "ring fence" from around its shares to make them available to foreigners, has raised gas prices for other former Soviet republics, Armenia, Belarus, and Georgia, though they will continue to receive gas at below-market prices.