Russian state gas giant Gazprom said it had instead signed an agreement on constructing an offshore pipeline across the Black Sea towards Turkey, the second biggest European-area importer of Russia gas after Germany.

The EU refused to say whether it believed Putin -- or Gazprom boss Alexei Miller who said: “That’s it, the project is closed.”

“To comment on whether South Stream is dead or not is not really for us to do,” said Anna-Kaisa Itkonen, an energy spokeswoman for the Commission.

The pipeline row is crucial because despite relations being at their worst since the Cold War, the EU gets about a third of its gas from Russia, with some Eastern European nations almost totally reliant on it.

Around half currently transits through Ukraine, and just last month the EU brokered a deal between Moscow and Kiev to resume gas deliveries halted by the crisis and ensure warmth for European homes.


Bulgaria rejects blame

South Stream would have removed the Ukrainian headache for Russia, but Brussels was less keen, seeing a need to look for other sources of energy away from the growing threat on its borders.

Bulgaria’s European Commission vice-president Kristalina Georgieva suggested that Putin‘s announcement had more to do with politics than the EU’s rules.

“The construction of pipelines should correspond to EU rules,” she said.

“This position is clear but it is in place for quite some time and it cannot be the reason for this decision” by Russia.

Bulgaria‘s president Rosen Plevneliev on Tuesday rejected any responsibility for Putin’s decision.

“It is clear to everyone that South Stream is not a project only between Russia and Bulgaria but between Russia and the EU... The decision is entirely in the hands of Russia and the European Union,” Plevneliev said.

The EU shot back that South Stream was a matter between Russia and individual member states, while adding that Bulgaria would not be entitled to any compensation from Brussels for the project‘s failure.

Hungary was meanwhile looking at alternative sources of gas including Azerbaijan “in order to secure Hungary’s long-term energy supply”, Foreign Minister Peter Szijjarto said Tuesday. (AFP)