Russia Monday took another step toward realizing a pipeline that would bring Russian natural gas to southern Europe when it signed a deal with Greece to build the South Stream gas pipeline.
The move could increase pressure on a rival pipeline project, Nabucco, which the European Union hopes will lower dependence on Russian gas supplies.
Russian state-controlled gas giant OAO Gazprom and Greece's gas transmission system operator DESFA S.A. will create a joint venture that will be responsible for the construction and use of South Stream in Greece, Gazprom said.
The South Stream pipeline—a joint project between Gazprom and Italy's Eni SpA—would carry Russian and Central Asian natural gas under the Black Sea to European markets.
Russia has already concluded bilateral agreements with Bulgaria, Hungary, Serbia, Croatia, Slovenia and Austria on South Stream, which may ship between 31 billion and 63 billion cubic meters of gas a year.
Last year, Russia cut supplies to neighboring Ukraine following a pricing dispute, which also affected supplies to Western Europe, as most of the pipelines from Russia run through Ukraine. The cutoff raised concerns over Europe's dependence on Russian gas and gave a boost to the EU-backed Nabucco, which would bypass Russia. That pipeline, however, is facing problems securing sufficient gas volumes from Central Asia and the Middle East.
Gazprom said the fifty-fifty joint venture with Greece's DESFA "includes engineering, funding, construction and operation of the pipeline on the territory of Greece."