Merkel and Putin, in talks last week in Berlin, discussed the possibility of doubling the capacity of Nord Stream to include third and fourth lines running under the Baltic Sea.
Their comments came as Alexei Miller, chief executive of Nord Stream majority owner Gazprom, asserted that European demand for natural gas would justify the construction of the new legs, which would increase its capacity to more than 110 billion cubic meters per year.
Merkel indicated earlier in the week during a summit of the Baltic Sea nations in Stralsund, Germany, that opposition to the project from those in her country who fear increasing dependence on Russian gas supplies was waning.
Merkel said the "controversy over the Nord Stream project has more or less settled again" and praised it as "one factor in ensuring secure energy supplies for Europe," an official statement said.
The German leader asserted a Nord Stream expansion could be feasible, Russia's Interfax news agency reported.
If demand for such gas volume exists, it would be possible to expand this system," she said, adding, "Of course, this would require additional approvals … but it is entirely possible."
Putin also voiced optimism following talks with Merkel Friday in Berlin, saying more gas via Nord Stream wouldn't make Germany more "dependent" on Russian supplies but would replace waning current sources in the North Sea, RT Television reported.
"The volumes of deliveries of Russian gas to Germany aren't growing from pre-crisis levels, with the proportion of Russian gas being used by Germany not growing as well," Putin said. "When we are talking about a possible increase (of deliveries), we mean falling extraction in the EU."
The Russian president said there were also other potential customers for an expanded Nord Stream.
"You know that gas through this transit corridor will be delivered not just to Germany, but other countries as well, with Scandinavian countries and the U.K. currently negotiating," he said.
The first of Nord Stream's two parallel pipelines shipping Russian gas to Germany via the Baltic became operational in November. The second has been laid and is expected to come online late this year.
Together, the 750-mile pipelines are expected to provide 55 billion cubic meters of natural gas per year to European users, allowing Russia to bypass Ukraine as a transiting country for some of its gas production.
Now Nord Stream says it's looking at potentially doubling its capacity through the construction of up two more pipelines -- a move it says would greatly enhance Europe's energy security by further reducing its dependence on the fractious relationship between Russia and Ukraine.
Miller, meanwhile, predicted at the annual meeting of the European Business Congress in Slovenia last week steadily rising demand for natural gas in Europe to will justify a Nord Stream expansion, Interfax reported.
Miller said he doubted Europe will be able to reach greenhouse gas-reduction goals through the development of renewables alone and will need to add gas-fired generators to replace "dirty" coal burning power plants.
The most economical route to reducing emissions, he said, is "through natural gas in a sensible combination with other energy resources, including renewable ones. It is enough to remove artificial barriers and the market will put everything it its place."