The 27-nation bloc had initially planned to allocate 250 million euros ($323 million) to finance the project, which aims to pump natural gas from Central Asia to Europe bypassing Russia, but later cut funds to 50 million euros ($64.5 million).

The $10 billion Nabucco pipeline, backed by the European Union and the United States, planned to carry 30 billion cubic meters (bcm) of Caspian or Middle Eastern gas annually to an Austrian hub via Turkey, is seen as one of Europe's best hopes for limiting its dependence on Russian gas.

Russia's transit disputes with its former Soviet neighbors have raised concerns in Europe about its heavy dependency on Russian energy.

Russia had cut off gas supplies to Ukraine on Jan. 1 after failing to reach a deal over debt and prices for 2009 in late December, and later halted gas deliveries to Europe, claiming Ukraine was stealing transit gas.

Nabucco has been plagued by delays over investment decisions, changes in EU law, disputes between consortium members and questions on the source of supplies.

Project shareholders include Austria's OMV, Hungary's MOL, Romania's Transgaz, Bulgaria's Bulgargaz, Turkey's Botas and Germany's RWE.