Putin first warned in April that Russia would do so, in a letter to European leaders whose nations are customers of Russian state-controlled Gazprom natural gas giant. He said Moscow would have to demand advance payment if Ukraine failed to start settling its mounting gas debt.
In the second letter released by the Kremlin today, Putin said that a meeting involving Russian, Ukrainian and the European Union officials has failed to settle the issue. Putin said that Ukraine's gas debt to Russia has kept rising and has reached USD 3.5 billion.
The move is part of Russia's efforts to retain control over its struggling neighbour, which has been teetering on the verge of financial collapse and facing a mutiny in the east, where pro-Russian separatists seized administrative buildings, fought government troops and declared two regions independent following Sunday's referendum.
Putin sought to cast the move as a purely economic decision, saying that Russia is "still open to continue consultations and work together with European countries in order to normalise the situation."
Ukraine has said it could start paying off the debt if Moscow restores the gas discounts cancelled following the ouster of pro-Russian president in February after months of protests.