(Adds quotes on Russian forces, background)
By Lesley Wroughton
WASHINGTON, March 13 (Reuters) - The United States and the European Union will take serious steps against Russia if a referendum on Ukraine's Crimea region goes ahead as planned on Sunday, U.S. Secretary of State John Kerry said on Thursday.
Kerry told a Senate hearing that he hoped to avoid such a response through discussions with his Russian counterpart, Sergei Lavrov, in London on Friday.
Even as tensions mounted in Crimea and Russia launched new military exercises near its border with Ukraine, Kerry cautioned against "hysteria or excessive concern" over the possibility that Russian forces could take over Ukraine.
"If there is no sign of any capacity to be able to move forward and resolve this issue, there will be a very serious series of steps in Europe and here with respect to the options that are available to us," Kerry said. He was testifying on the State Department's 2015 budget request before the Senate Appropriations Committee on Foreign Operations.
The Obama administration has already prepared the way for imposing visa bans and asset freezes on Russian and Ukrainian individuals and companies. In a related move on Wednesday, the Senate Foreign Relations Committee approved a bill addressing the crisis that would place sanctions on Russians involved in Moscow's intervention in Ukraine and provide aid to Ukraine's new government. That legislation will go to the full Senate.
Washington on Wednesday also announced that it would release 5 million barrels of crude from its emergency reserves, but denied that action was tied to tensions with Russia. However, observers pointed out that such steps could drive down the price of oil and squeeze Russia's petroleum-dependent economy.
The EU, which does 10 times as much trade with Russia as the United States and is dependent on Russian natural gas supplies, has already agreed on a framework to match U.S. sanctions.
Moscow has pledged to respond in kind to any Western sanctions, and China's ambassador to Germany warned of a "spiral" of sanctions hurting both sides.
Putin defended Russia's right to send troops into Ukraine on Tuesday, but said he would use force only as a last resort.
Kerry said the United States believed there were about 20,000 Russian troops in Crimea but that those forces were not in a position to move into the rest of Ukraine.
Under a historic agreement, Russia is allowed to have up to 25,000 troops at a military base in Crimea, Kerry said.
"We have contingencies, we are talking through various options that may be available, but our hope is not to create hysteria or excessive concern about that at this point in time," Kerry said.
"Our hope is to be able to avoid that, but there is no telling that we can," he said. "We make the judgment at this point that they don't have the assets in the places necessary to be able to march in and take over all of Ukraine, but that could change very quickly and we recognize that."
Citing discussions with Ukrainian officials on the possibility of a Russian invasion, Kerry said they believed "there would probably not be an all-out confrontation initially, but you would have a longtime insurgency."
Ukraine has already called up all military reserves and ordered its armed forces to be combat-ready in case Putin deploys troops in Ukraine. (Additional reporting by Doina Chiacu; Editing by Bill Trott and Jonathan Oatis)