Ukraine and Russia were on Monday locked in a high-stakes energy dispute after Kiev refused to pay a stunning $7 billion bill for energy it allegedly promised to purchase from Moscow but never did.

The new crisis in relations between the two uneasy neighbors came just as Ukraine signed a $10 billion shale gas project with Royal Dutch Shell, a deal that could relieve the country's painful dependence on Russian gas.

It also comes four years after Russia's gas giant Gazprom interrupted pipeline deliveries to Europe in a reminder of what bilateral disputes can do to unsuspecting clients in distant locales.

"We are not going to pay it," a high-ranking Ukrainian official told AFP on condition of anonymity.

A source at the national oil company Naftogaz called the Russian bill - reportedly presented to Kiev just hours before it was to sign its Shell deal in Davos - a form of diplomatic pressure aimed at eventually wresting control of Ukraine's energy distribution network.

"We see this as a form of pressure that comes in the midst of continuing negotiations about the creation of a gas transport consortium (with Europe) and a reduction in the price of gas for Ukraine," the Naftogaz source told the Kommersant Ukraine daily.

The neighbors have fought for decades over gas Ukraine uses in large quantities because of its inefficient industry but for which its stuttering economy is often unable to pay.

Ukraine has attempted to use its transit nation status to negotiate lower prices.

AFP