Washington  - The United States Thursday urged Russia and the Ukraine to resolve their dispute over payments and debts owed for natural gas in a "transparent, commercial manner."

In a statement issued by US Department of State acting deputy spokesman Gordon Duguid, the US said it was "concerned" that Russia's Gazprom had cut off gas that is sold to Ukraine.

"The US encourages Gazprom and Naftogaz to resume negotiations on an agreement that will maintain the reliability of gas delivery to Ukraine and Europe," Duguid said.

Gazprom cut 100 per cent of supplies to Ukraine starting at 0700 GMT Thursday after last-ditch talks New Year's Eve on a new deal for gas deliveries failed.

Kiev has asked the European Union to mediate in the standoff that threatens disruptions in deliveries to Europe.

Over 80 per cent of Russian gas exports to Europe pass through Ukrainian pipelines. (dpa)