A dispute between Russia and Belarus about gas bills is stepping up a gear.
Belarus has now threatened to stop the flow of Russian gas through its pipelines to Europe.
About a fifth of deliveries to Europe are pumped through Belarus.
Gazprom, Russia's state-controlled gas monopoly, has started to cut supplies to Belarus.
Last week, President Dmitry Medvedev warned Belarus that it would face cuts unless it paid its gas debts within five days.
Gazprom says Belarus owes about $US200 million 160 million euros) after failing to pay increased prices.
The BBC reports it is not clear whether the dispute would affect European customers or if Gazprom would be able to send more gas via Ukraine.
Russia started cutting gas supplies by 15% on Monday, They are due to gradually increase to more than 80% if there is no breakthrough in negotiations between the two countries.
According to the Ria Novosti news agency, Gazprom's chief executive Alexei Miller said Belarus admitted having the debt.
But he told Mr Medvedev on Russian television that Belarus "proposes to pay it with machinery, equipment and various other products."
Mr Medvedev said foreign payments could only be accepted in foreign currencies: "Gazprom cannot accept debt repayments in anything, be it pies, butter, cheese or other means of payment."
Belarus insists that Russia provide it with cheap oil and gas as part of a customs union deal between the two countries which is due to come into force next month.
No debt - Belarus
Last week, Belarus President Alexander Lukashenko said his country owed nothing to Gazprom, but would settle any disagreement.
Mr Lukashenko says prices should have remained the same as part of the forthcoming customs union deal.
Belarus wants to settle any outstanding debt at last year's prices.
Russia increased the price of gas supplied to Belarus from $US150 per 1000 cubic metres of gas last year, to $US169.20 in the first quarter of 2010 and $US184.80 in the second.
But Belarus has continued to pay at $US150. Gazprom said at this rate it could owe $500 million or $600 million by the end of the year.