Russia and Turkey have signed a memorandum of understanding over the construction of a gas pipeline under the Black Sea that could effectively replace the stalled South Stream project.

The new pipeline will be able to carry 63 billion cubic metres (bcm) of gas per year to Turkey, the head of Russian gas giant Gazprom Alexey Miller told reporters in Ankara on Monday.

According to Miller, Turkey will receive 14 bcm out of the projected total, while the remainder will be delivered to a hub near the country’s border with Greece.

He went on to say Gazprom planned to set up a company to build the proposed new gas pipeline to Turkey with potential participation of Turkish partners.

"We are ready to discuss with the Turkish side their participation, if they are interested in that. A legal entity for the implementation of this project will be set up in Russia,” said Miller.

Referring to the stalled South Stream project, the Gazprom cheif said: "That's all, project closed".

Russia's President Vladimir Putin said at a news conference earlier on Monday that Moscow would discontinue the South Stream project “in the current conditions.”