KIEV, Oct. 29 – Russia warned Ukraine on Tuesday of serious problems with natural gas supplies unless the country pays immediately its overdue $882 million gas debt.

The warning comes days after Russian President Vladimir Putin failed to persuade President Viktor Yanukovych to abandon his pro-Western foreign policy course and to join a Moscow-led trade bloc.

Russian Prime Minister Dmitry Medvedev described the debt problems as “critical“ and ordered Gazprom, Russia’s gas monopoly, to take steps that could make Ukraine’s situation even worse.

"The (problems) exist and they are absolutely critical," Medvedev said at a government meeting.

Alexei Miller, Gazprom’s CEO, said Ukraine had been given until October 1 to pay for natural gas deliveries in August, but no payment had yet been received. He said Gazprom had also paid Ukraine $1 billion up front to pump gas though its territory to Europe.

"The situation with Ukraine's gas payments is coming to a boil. Ukraine has failed to pay fully for August supply," Miller told the meeting. Earlier he said he was "extremely concerned".

Gazprom may oblige Ukraine's national energy company Naftogaz Ukrayiny to make pre-payments for the future gas supplies if the debt is not settled promptly, the statement said.

"The breach of contractual obligations regarding the payment entails the introduction of the advance payment mode for gas deliveries," Gazprom said in a statement released earlier on Tuesday.

Medvedev said this may be the way to go for Gazprom. "Considering such a clause exists in the contract, it is a viable option. However, it may aggravate the situation," Medvedev said as quoted on the government website.

"We need to see the reaction of our Ukrainian partners...If there is no reaction, we need to switch to the pre-payment mode," Medvedev said.

Ukraine, which is currently facing financial crunch, would most likely not be able to pay Gazprom upfront, which suggests that the Russian company may be forced to suspend gas supplies to Ukraine.

Prime Minister Mykola Azarov on Tuesday admitted Ukraine had problems with paying for the Russian gas supplies but said the issue was "not critical."

The language used by Medvedev and Gazprom signals that an escalation is possible that could lead to gas supply disruptions.

Russia and Ukraine have waged two gas wars over prices in the winters of 2006 and 2009, with Moscow halting deliveries not only to Ukraine but to the rest of Europe, forcing some in the European Union to seek alternative sources of energy.

Putin wants Ukraine to join a Moscow-led Customs Union and Russia has put pressure on its neighbor, which faces large payments to service its debt over the next 18 months, by tightening customs rules and banning some imports.

Earlier this year, Russia hinted that gas prices which Kiev has called "exorbitant" could be cut if it joined the Customs Union, which unites Russia with two other former Soviet republics, Kazakhstan and Belarus.

Putin and Yanukovych met in the Black Sea resort of Sochi on Sunday for bilateral talks, although neither side has commented on what was discussed.

Putin tried to persuade Yanukovych to abandon the pro-Western foreign policy, Kommersant-Ukraine business daily reported on Tuesday citing people familiar with the talks.

Ukraine, which imports nearly all its gas from Russia, pays about $400 per 1,000 cubic meters, slightly higher than the average price paid by European customers.

Naftogaz said earlier this month it had 17 billion cubic meters of gas in storage, enough to get through the winter.

Gazprom ships more than half of its gas to Europe via Ukraine. (tl/rt/ez)