South Stream is meant to add a layer of diversity to Russian gas export options for Europe. The project has come up against opposition from a European Union wary of Russia's grip on the regional energy sector.
Putin said Tuesday his government was standing behind the project despite the difficulties.
"We have always valued our reputation of a reliable supplier of energy resources and invested in the development of gas infrastructure," he said.
South Stream would avoid geopolitically sensitive territory in Ukraine, which hosts the bulk of the Russian gas headed to European customers. Russian energy company Gazprom said in June it wouldn't supply gas to Ukraine unless it was paid in advance. Similar issues in 2006 and 2009 caused gas shortages in Europe.
Putin said the European Union is being used as a pawn and the interests of some European member states are put aside in favor of Brussels' whims.
An EU measure aimed at limiting the influence of companies like Gazprom, the president said, will "hinder the diversification of energy supplies to the European market."