"I have just talked with Viktor Andreyevych [Yuschenko] for almost an hour - so far no agreement has been reached," Putin said.

Asked to explain why, Putin said, "They don't want to pay."

Meanwhile, Russian Foreign Minister Sergei Lavrov told Vesti-24 news channel that the mechanism of early warning on possible restrictions for gas supplies should cover transit countries including Ukraine,

"The European Union has asked us to create a mechanism of early warning [in case of possible gas supply restrictions] . We have told our colleagues in Brussels for several years that this mechanism should include transit countries but we have not noticed that the EU has conducted such work with Ukraine," Lavrov said.

Russia has been making every effort, he said. "Besides the fact that we have honestly informed [EU] on the talks [with Ukraine], even a year ago Russia set apart the contracts for gas supply to Ukraine and those for gas transit to Europe," he said.

"It is possible to imagine that currently the European countries cannot make some statements reflecting their understanding of the Russian position for political reasons, but this understanding is in place in the conversations conducted between the Europeans and Moscow," he said.

Also on Monday, Russian President Dmitry Medvedev met with Verkhovna Rada Speaker Volodymyr Lytvyn on Monday, the Kremlin said.

"They discussed the current situation in the Russian-Ukrainian relations," it said.

"The Russian president said he was concerned over the weakening dynamics of Russian-Ukrainian relations as well as with a range of problems including payments for Russian gas supplies," it said.

"Medvedev said he hoped the situation would improve next year," it said