Russia, Italy Sign Pipeline Deal

At a ceremony in the Kremlin, officials from Russian gas giant OAO Gazprom and Italy's Eni SPA signed an agreement setting up a 50-50 joint venture to develop a marketing and feasibility study for the South Stream pipeline. The ceremony was attended by Russian President Vladimir Putin and Italian Premier Romano Prodi.

If completed, the $10 billion (6.74 billion euros) project would run more than 560 miles under the Black Sea and through Bulgaria. It could eventually distribute gas to northern and southern Europe, with an estimated annual capacity of 30 billion cubic meters (1.15 trillion cubic feet).

Russia has sought to build alternate export routes to bypass two former Soviet republics, Ukraine and Belarus. Moscow has had bruising disputes with the two countries that have lead to disruptions in energy supplies to Europe.

European nations hungry for energy imports, meanwhile, are growing increasingly concerned about over-reliance on Russia, which supplies up to 40 percent of the European Union's natural gas and up to a third of the oil imports of come European countries.

"I believe the new pipelines system, which complies with the strictest technological and environmental criteria, will significantly improve the security of supply of the whole of Europe," Eni CEO Paolo Scaroni said.

Moscow and Brussels have struggled to reach a new agreement spelling out the details of bilateral relations, with EU member Poland blocking any new agreement because of Moscow's ban on Polish meat and agriculture imports.

"The South Stream project is of strategic importance for Europe's energy security," Putin told reporters. "It is being implemented based on principles of transparency and taking into account interests of energy suppliers and consumers."

Prodi, meanwhile, emphasized the increasingly intertwined ties between Russia and the European Union, repeating his observation that the two sides go together like "vodka and caviar."

"Russia and Europe are interdependent. Europe needs Russia and Russian needs Europe," he said.

"We need to move as quickly as possible toward a strategic partnership," he said.

Welcoming Prodi, Putin said trade between Russia and Italy this year would likely exceed last year's record high of $30 billion (20 billion euros).

The two countries are "developing a policy of long-term friendship" based on "mutual understanding, cooperation and shared spiritual values," Prodi said.

The Italian premier also signed a document of intent to return ownership of a Russian Orthodox Church in the Adriatic port city of Bari to Russia.

The gesture, announced by Prodi in March, is meant to improve long-strained relations between the Russian Orthodox Church and the Roman Catholic Church

The church was built in the early 20th century to welcome Russian pilgrims who traveled to Bari to pray near the relics of St. Nicholas of Myra. It became the property of the city of Bari in 1937 as the number of Russian Orthodox pilgrims dwindled following the Russian Revolution.