Russia, supplier of a quarter of Europe`s gas, signed a pipeline agreement with Italy today that will give the Kremlin more control over the continent`s energy market. OAO Gazprom, Russia`s gas exporter, and Italy`s Eni SpA agreed to form the operating company for a 10 billion-euro ($14.8 billion) link from Russia to Europe via the Black Sea. The deal was signed in the Kremlin during Italian Prime Minister Romano Prodi`s visit with President Vladimir Putin, Gazprom said in an e-mailed statement. "We`re using this opportunity to get a political blessing,`` Eni Chief Executive Officer Paolo Scaroni told reporters. ``Pipelines in general, and South Stream in particular, are such a significant infrastructure investment that they raise political attention.`` Gazprom and Eni will each own half of the new company, which will hammer out the technical details of constructing the 900- kilometer (560-mile) South Stream pipeline, Scaroni said. The company will be formed by Jan. 15, 2008, and start deliveries in 2013, Gazprom said in the statement. South Stream will be Russia`s second underwater gas link to the European Union that bypasses Ukraine and Belarus, through which most of Gazprom`s exports flow, after the Nord Stream pipeline is built under the Baltic Sea to Germany. The two projects will enable Russia to boost shipments to Europe by more than 50 percent as early as 2013. More Partners Running under the Black Sea to Bulgaria, South Stream will cost ``more than 10 billion euros,`` Scaroni said. The operator will be registered in Switzerland or the Netherlands. Gazprom and Eni already have Blue Stream, which moves Russian gas across the Black Sea to Turkey. This year Gazprom plans to transport 10 billion cubic meters of gas via Blue Stream, up from 7 billion in 2006, according to the statement. The operating company may take on more partners depending on which countries the pipeline crosses on its way to western Europe, Scaroni said. In Bulgaria, the pipeline will split into a northern route going to Austria via Romania and Hungary, and a southern route crossing the Balkan peninsula to Italy. The northern route passes through the same countries as the Nabucco pipeline from Turkey to Austria, which the EU is pushing to reduce dependence on Russia. Both South Stream and Nabucco are designed to carry about 30 billion cubic meters of gas a year. "I think Europe has room for Nabucco and South Stream,`` Scaroni said. "We expect a lot of support from the EU because South Stream is a European project.`` When asked if South Stream and Nabucco could share the northern route, Scaroni said: "Why not? It`s not on the agenda, but we`re open to cooperation.`` Deeper Ties South Stream is the southern link in Gazprom`s strategy to boost capacity and cut reliance on transit countries. Gazprom plans to build the Nord Stream pipeline under the Baltic Sea from Russia to Germany with partners E.ON AG, BASF AG and Nederlandse Gasunie NV. Eni unit Saipem SpA was contracted to build the 1,200-kilometer link in September. Together the two pipelines will have a capacity of 85 billion cubic meters, more than half of the 151 billion cubic meters Gazprom delivered to Europe in 2006. Nord Stream is scheduled to start pumping gas in 2010 and reach its full capacity of 55 billion cubic meters three years later. Gazprom cut deliveries to Ukraine briefly over a price dispute in January 2006, causing shortfalls across Europe. The Russian gas export monopoly threatened to shut off gas to Belarus on Jan. 1 this year in a similar price disagreement. Eni, Gazprom`s single biggest customer in Europe, has imported Russian gas since 1974. The two companies signed a ``strategic partnership agreement`` a year ago to develop projects jointly in Russia and North Africa in return for Gazprom gaining the right to sell gas directly to Italian consumers. The companies deepened their ties this year when Eni bid for oil and gas assets owned by bankrupt OAO Yukos Oil Co., including a 20 percent stake in Gazprom`s oil arm OAO Gazprom Neft. Gazprom hasn`t yet exercised a call option to take control of the assets. When it does, Eni will be left with a 30 percent stake in the production assets, allowing it to book reserves of 1.5 billion barrels of oil equivalent, Scaroni said.