Hungary, Russia agree South Stream pipeline joint venture

(BUDAPEST) - Russia and Hungary signed on Friday an agreement setting up a joint venture to build the Hungarian section of the Russian-backed South Stream gas pipeline.

The agreement was signed in Budapest by Hungarian Finance Minister Peter Oszko and Russia's Deputy Prime Minister Viktor Zubkov, who is also chairman of energy giant Gazprom, the company behind South Stream.

"Hungary must seize every concrete opportunity to diversify its energy supplies," Hungarian Premier Gordon Bajnai told reporters shortly before the signing of the deal.

"One of the most serious and most concrete options is the South Stream project," he added.

"The signing of this deal is an important step towards preparing the Hungarian section of South Stream," Zubkov added later, speaking to the press.

Budapest signed an agreement with Moscow in February 2008 to take part in South Stream, which is backed by Russia's Gazprom and Italy's Eni.

But in July 2009, Hungary also joined the rival EU pipeline project, Nabucco, alongside Austria, Bulgaria, Romania and Turkey.

South Stream will carry Russian gas to Europe via the Black Sea and avoiding Ukraine, which has often been in conflict with Russia over energy supplies.

Meanwhile, Nabucco will bring gas from the Caspian Sea to Europe while bypassing Russia in a bid to reduce the continent's energy reliance on Moscow.

During his visit to Budapest, Zubkov also met with Viktor Orban, the leader of the main opposition party Fidesz, which is widely expected to win general elections in April.