Gazprom said it was cutting daily gas deliveries via the Nord Stream pipeline to 33 million cubic metres a day -- about 20 percent of the pipeline's capacity -- from Wednesday.
The company said in a statement on Monday that it was halting the operation of one of the last two operating turbines due to the "technical condition of the engine".
The supplies from the Portovaya compressor station will be slashed from 7 am Moscow time Wednesday, the company said.
The German government said there was no technical justification for Gazprom's announcement.
"According to the information we have there is no technical reason for a reduction of deliveries," a German economy ministry spokeswoman told AFP.
Gazprom's announcement came after Russia last week restored critical gas supplies to Europe through Germany via Nord Stream after 10 days of maintenance, but only at 40 percent of the pipeline's capacity.
Germany, which is heavily dependent on Russian gas, has accused Moscow of using energy as a "weapon".
Gazprom cut flows to Germany via the Nord Stream 1 pipeline under the Baltic Sea in recent weeks, blaming the absence of a Siemens gas turbine that was undergoing repairs in Canada.
Earlier Monday Gazprom said it had received paperwork related to the delayed delivery of the turbine but pointed out a number of issues remained, including those relating to EU and UK sanctions.
The showdown comes amid raging tensions over Russia's intervention in Ukraine. EU states have accused Russia of squeezing supplies in retaliation for Western sanctions over the offensive.
The European Union has suggested that member states reduce demand for gas to secure winter stocks.
A total shutdown in imports or a sharp reduction in the flow from east to west could have a catastrophic effect on the European economy, shutting factories and forcing households to turn down the heat.
A number of countries said they oppose the EU plan to reduce demand for gas, with Warsaw voicing its objections to a 15 percent reduction in natural gas consumption on Monday.
"We cannot agree to this," said Polish Climate Minister Anna Moskwa.
"It is difficult for countries to give the green light to a mandatory gas reduction without knowing what will happen next winter," she added, quoted by the PAP agency.