Gazprom told Reuters that the latest decision comes as the company faced various issues with regard to the Turkish Stream pipeline.
According to Saipem, the cancellation for convenience is a standard contractual clause which provides for the termination of the agreement in the absence of a contractual breach.
Compensation would be determined in accordance with the terms and conditions of the contract, the company said.
Saipem also confirmed that the pipelaying vessel Castoro 6 was in the process of mooring in Russian waters in order to begin pipelaying activities.
Following the deal termination, Gazprom is in the process of seeking other potential contractors to construct the first line of the Turkish Stream pipeline.
Due to be launched in 2016, the first line would have supplied only Turkey.
Bloomberg said that Saipem had expected to begin work on the project in June.
The project replaced an earlier proposal from Gazprom called the South Stream gas pipeline, which was abandoned at the end of 2014 due to the strained relations Russia has with the European Union over the conflict in Ukraine.