ROME (Dow Jones)

Outgoing Italian Premier Romano Prodi has declined an offer from OAO Gazprom (GAZP.RS) to become chairman of South Stream AG, a new pipeline linking Russia to Europe, Prodi's spokesman said Monday.

Prodi, a former president of the European Commission who is due to step down from the Italian premiership next month, was formally offered the position at a lunch in Rome with Gazprom Chief Executive Alexei Miller.

Prodi was told about the proposal by Russian President Vladimir Putin when they last met in Bucharest, Romania, April 4, the spokesman said.

"Prodi was extremely flattered, but reiterated that he wants to take some time off to ponder after leaving Italian politics," spokesman Silvio Sircana said.

Paolo Scaroni, chief executive of Italian oil and gas company Eni SpA (E), also took part in the lunch at the Italian premier's office. South Stream is jointly owned by Gazprom and Eni.

The pipeline project will connect Russian gas fields to European consumers via the Black Sea to Bulgaria.

Last month, Eni said the two companies planned to present their plans for the South Stream project, which may cost about EUR10 billion and could transport 30 billion cubic meters a year, to E.U. officials.

The E.U. and U.S. are promoting a gas pipeline, called Nabucco, from the Caspian region to Austria via Turkey to cut Europe's dependence on Russian gas.

E.U officials have estimated the 27-nation bloc will need to import 220 billion cubic meters of gas a year by 2015, or about 60% more than it does now.

Germany's former chancellor, Gerhard Schroeder, holds the position as supervisory chief of Nord Stream AG. The Russian-German consortium, which comprises Gazprom, E.ON AG (EOA.XE) and BASF (BAS.XE), will Russian supply gas via the Baltic Sea. Gazprom owns 51% in the 1,200-kilometer pipeline venture to supply 55 billion cubic meters a year.

Russia is seeking alternative routes for its gas supplies to high-paying Western European customers to its traditional ones in Ukraine and Belarus after pricing disputes with the former Soviet countries risked blocking flows.

Russia has repeatedly said South Stream isn't a rival to Nabucco.

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