Russia is not considering a proposal to...

"We are not discussing such issues," Shmatko said.

Shmatko commented on a recent suggestion by Italy"s Eni SpA, Gazprom"s partner in the South Stream gas pipeline project, that combining some sections of the pipelines would cut costs and boost profits.

Eni CEO Paolo Scaroni was reported to say at a Cambridge Energy Research Associates conference in Houston on Wednesday that if all the partners decided to merge the two pipelines for part of the route, "we would reduce investments, operational costs and increase overall returns."

Shmatko also said Russia welcomed Europe"s desire to diversify gas supply routes but did not consider the South Stream and Nabucco as rival projects.

Both South Stream and Western-backed Nabucco aim to supply natural gas to Southern and Central Europe. The South Stream project is designed to deliver up to 63 billion cubic meters of Central Asian and Russian natural gas under the Black Sea while Nabucco is intended to pump 31 billion

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