Majority owner Gazprom may step in to finance the Bulgarian portion of the proposed South Steam pipeline to Europe, a Russian report indicates.

Citing an anonymous source, RIA Novosti reported Friday the state-owned Russian company could move to pay for both the Russian and Bulgarian parts of the leg through the country.

The report came after Bulgarian Economy Minister Delyan Dobrev told Parliament the countries were battling over the upfront costs and the profit allocations for the South Stream project, which would be built in two parallel lines along the Black Sea floor.

"Gazprom may pay for (the Russian) part as well as for the Bulgarian part and then cover its losses by transit payments," the source told the news agency.

Earlier last week, Dobrev informed Bulgarian lawmakers Gazprom had delayed implementing Sofia's 11 percent gas price discount due to "new demands" over the South Stream pipeline.

Dobrev added Friday that "there are still disputes over the percentage shares of loans and own funding," the Sofia News Agency reported.

The unnamed source cited by the Russian agency said the disagreements cropped up because Bulgaria didn't have "enough funds to finance its part of the project."

A final investment decision on South Stream is expected by November, Gazprom Chief Executive Alexei Miller said on the sidelines of the World Gas Conference in Malaysia last week.

"The parties discussed the progress with the South Stream project as well as the action plan for its implementation before the year end," he said.

Miller and South Stream consortium Chief Executive Marcel Kramer "reviewed the results of the action plan aimed at adopting the final investment decision on the project by mid-November 2012," the company said.

There will be four total legs of the South Stream pipeline. The project is part of a transit diversification strategy from Gazprom, which sends the bulk of its natural gas through a transit network in Ukraine.

Payment and contractual disputes between Gazprom and Ukraine make conventional routes risky. Gazprom in 2009 cut off the natural gas to Ukraine because of the woes.

South Stream would run along nearly the same route as European-backed pipelines that would cross from Central Asia through Turkey. Its main shareholders include Gazprom with 50 percent, Italy's Eni with 20 percent and Germany's Wintershall Holding and France's EDF with 15 percent each.

The state-owned Bulgarian Energy Holding and its subsidiary Bulgargaz signed a contract with Gazprom in November 2010 to create a joint venture -- South Stream Bulgaria -- in which both own 50 percent of the leg through the country.

Bulgaria's participation was estimated to be $500 million-$625 million at the time, the Sofia News Agency said.

If the parties fail to agree, Romania could take Bulgaria's place as the Black Sea landing point for South Stream, despite the increased costs that would necessitate, Russian officials have said.

Despite the disagreements, Bulgarian Deputy Minister of Economy and Energy Eugenia Haritonov said last week she believed her country will end up participating in South Stream.

Haritonov told the energy conference in Sofia her main priorities are to avoid dependence on external energy supplies and to protect the Black Sea environment, on which Bulgaria depends for tourism revenues, Radio Bulgaria reported.