Plans to construct a 2,500km-pipeline to channel Russian gas to Europe may come to a standstill, Putin suggested during a press conference on Monday in Istanbul.
“If Europe doesn’t want to carry out [the project], it won’t be carried out,” he was quoted as saying in Il Sole 24 Ore.
Alexej Miller, CEO of Russian energy company Gazprom, reportedly went a step further and said “the project is finished”.
The Russians’ comments put the future of the project in doubt, following already strained relations over Moscow’s involvement in the Ukraine conflict.
Italy energy giant Eni holds a 20 percent stake in South Stream, while Gazprom has a 50 percent investment. The remainder is equally shared between Germany’s Wintershall and French company EDF.
On Tuesday morning Eni had not yet made a statement responding to Putin's comments.
Despite economic sanctions being imposed against Russia, Italy's undersecretary for European politics earlier this year backed the South Stream project.
Sandro Gozi said the pipeline “would improve the diversification of gas routes to Europe,” as the EU would no longer have to rely on channels through Ukraine.
Economic Development Minister, Federica Guidi, however said South Stream “is no longer on the priority list” for the Italian government, Il Sole reported.
Italy currently relies on Russia for around 31 percent of its gas supply, while in Germany this rises to 38 percent.