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Valves of a gas pipeline are seen not far from Kiev.

Valves of a gas pipeline are seen not far from Kiev. Close

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Valves of a gas pipeline are seen not far from Kiev.

Ukraine faces a 37 percent increase in the price it pays for Russian natural gas after OAO Gazprom canceled a discount and threatened to cut supplies, Ukrainian Energy Minister Yuri Prodan told reporters yesterday.

Ukraine will pay about $368.50 per 1,000 cubic meters of the fuel in the second quarter, Prodan said. Russia agreed last year to cut the price it charges Ukraine to $268.50. Gazprom rescinded the discount last week and said Ukraine risks a repeat of 2009, when the Moscow-based company reduced shipments during a pricing dispute.

Gazprom, which supplied more than half of Ukraines gas last year, agreed to the discount when the nation was governed by President Viktor Yanukovych, who fled to Russia in February after three months of street protests. Russian President Vladimir Putin has refused to acknowledge Kievs successor government. Pro-Russian forces have taken up positions in Ukraines Crimea region, which will hold a referendum on March 16 on joining Russia.

I will have talks on March 19 in Brussels with the EU commissioner and companies, Prodan said, referring to a planned meeting with European Union Energy Commissioner Gunther Oettinger on possible substitutions for Russian gas.Slovakia is likely to help with gas transit, Prodan said, citing a conversation with Oettinger.

Ukraine needs to import about 30 billion cubic meters of gas this year, of which a third may come from Slovakia, Prodan said March 5. Gazprom said March 7 in a statement its owed $1.89 billion by Ukrainian state gas company NAK Naftogaz Ukrainy for supplies already received.

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Ukraine Sees Gazprom Charging 37% More for Gas in Second Quarter

Ukraine began military drills as Russian forces tightened their hold on the Crimean peninsula and the Foreign Ministry in Moscow warned of lawlessness in the former Soviet republics eastern provinces.

Ukraines armed forces are testing the combat-readiness of troops, the Defense Ministry said today on its website, reiterating the governments desire for a peaceful end to the standoff in Crimea. Russia, which has vowed to defend the ethnic Russians that dominate Crimea after an uprising in Kiev, accused Ukraine of ignoring radicals in the nations east.

Russia is wresting control of Crimea, home to its Black Sea Fleet, from Ukraine following last months ouster of the former Soviet republics Moscow-backed president, Viktor Yanukovych. Ukraine says its neighbor has almost 19,000 soldiers in the region, which will vote on joining Russia on March 16. The crisis is the worst between Russia and the West since the Cold War, with the European Union and the U.S. imposing sanctions.

More on the Crisis in Ukraine:

In Europe we have spent the last 70 years working to keep the peace, and we know from history that turning a blind eye when nations are trampled over stores up greater problems for the longer term, U.K. Prime Minister David Cameron told lawmakers in London today. We must stand up to aggression, uphold international law, and support the Ukrainian government and the Ukrainian people who want the freedom to choose their own future.

Ukrainian soldiers peer out of the main entrance of barracks Ukrainian military base in... Read More

Ukrainian soldiers peer out of the main entrance of barracks Ukrainian military base in Eupatoria, taken under control by Russian army forces in Crimea on March 5, 2014. Close

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Ukrainian soldiers peer out of the main entrance of barracks Ukrainian military base in Eupatoria, taken under control by Russian army forces in Crimea on March 5, 2014.

Ukraine sent troops to training grounds after alleging that Russian soldiers seized a missile unit at Chornomorskoe in Crimea. Ukraines border service said Russian forces control 13 border bases and the ferry crossing across the Kerch Strait to Russia.

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Ukraine Starts Military Exercises as Russia Warns on East

The threat of military conflict over Crimea has loomed ever larger this week, after troops in Russian army uniforms appeared there. Russia's President Vladimir Putin has claimed that they are local militia who have bought Russian uniforms.

"No one will recognize this referendum, apart from maybe North Korea, Syria and Venezuela," Yatsenyuk said. "I want to be very clearCrimea was, is, and will be an integral part of Ukraine. No concessions. Full stop."

(Read more: Vitali Klitschko: Putin worried over Ukraine)

The U.S. and Russia seemed to be at loggerheads on Friday, after Putin reiterated his wish to protect the Russian-speaking people of Ukraine, and U.S. President Barack Obama announced asset freezes and visa bans on some Russians and Ukrainians accused of threatening Ukraine's sovereignty.

Yatsenyuk, speaking in Kiev, struck a more optimistic note when asked about the possibility of opening negotiations with Russia.

He described the situation as "not as bad as we expected and not good as we need to do."

(Read more: Putin rebuffs Obama as Ukraine crisis escalates)

Yatsenyuk defended his "entirely legitimate" government against Russian claims that it is "fascist." He came to power in February following protests in Kiev against Kremlin-backed Viktor Yanokovych's rule.

He pointed out that the government was supported by the majority of members of Ukraine's parliament, and by minorities who are not usually part of Ukraine's government.

By CNBC's Catherine Boyle. Follow her on Twitter @cboylecnbc.

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Ukraine's PM: No concessions on Crimea

March 6, 2014: Ukraine Prime Minister Arseniy Yatsenyuk at a the NATO aliance headquarters in Brussels.REUTERS

Ukraine Prime Minister Arseniy Yatsenyuk is coming to Washington this week to discuss Russian troops taking control of the Crimea region of his country, the White House confirmed Sunday to Fox News.

President Obama will welcome Yatsenyuk of Ukraine to the White House on Wednesday, according to the administration.

Russian troops began taking control of facilities in the region about a week ago, amid the political uprising in Ukraine in which residents have ousted President Viktor Yanukovych.

Obama has spoken by phone twice with Russian President Vladimir Putin, saying that taking control of Crimea violates Ukraine's sovereignty.

The visit will highlight the United States' support for the people of Ukraine. And the discussions will focus on finding a peaceful resolution to Russias ongoing military intervention and how the international community can help Ukraine confront the resulting economic challenges, the White House said.

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UKRAINE CRISISPM Yatsenyuk to travel toDC this week for talks

Ukraine's first medalist of the Sochi Paralympics dedicated her achievement Saturday to Ukrainian independence and appealed for peace with Russia.

Olena Iurkovska won bronze on the first morning of competition, just hours after Ukraine's Paralympics team decided to attend the 10-day event despite Russia's military occupation of the nearby Crimean peninsula.

Iurkovska finished third in the women's 6 kilometer sitting competition. Svetlana Konovalova of Russia took silver.

"I devote my first medal in Sochi to an independent Ukraine," Iurkovska said. "Every time I race, it will be for Ukrainian independence and peace in my country."

Iurkovska embraced Valentina Matvienko, the speaker of Russia's upper house of parliament, at the post-event flower ceremony.

Later Saturday, Ukraine won two more bronze medals in the biathlon, while Maksym Yarovyi claimed silver in the men's 7.5-kilometer sitting event and Vitaliy Lukyanenko took gold in the visually impaired class.

The crisis in Ukraine has overshadowed the second phase of Putin's bid to use the Winter Games to polish his country's image abroad. Russia's military intervention in Crimea, some 300 miles (475 kilometers) west of Sochi on the Black Sea coast, began after the closing ceremonies of the Olympics two weeks ago.

Rob Harris can be followed at http://www.twitter.com/RobHarris

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Ukraine's 1st Medalist at Sochi Appeals for Peace