Three European energy companies have signed an agreement with the Russian gas export monopoly Gazprom to build a gas pipeline into eastern Europe.
EdF of France, Eni of Italy and Wintershall of Germany will take a 50% stake in the project and Gazprom the other 50%.
Eni will have a 20% share while EdF and Wintershall have 15%.
The South Stream pipeline will transport Russian natural gas to Europe under the Black Sea.
It is expected to supply six countries - Bulgaria, Serbia, Hungary, Slovenia, Austria and Italy - in one leg and another four - Croatia, Macedonia, Greece and Turkey - in a second leg.
The BBC reports construction is expected to begin in 2012 with gas expected to start flowing in 2015.
Eni chief executive Paolo Scaroni told Russian news agencies that the construction of the underwater section alone would cost $US10 billion.
Gazprom's latest results showed a sharp rise in demand from European customers, with demand up 40% on the previous quarter.