Russia and Serbia inked Monday an agreement on the construction of South Stream gas pipeline through, Russian news agency RIA Novosti reported. The pipeline would move Russian gas along the Black Sea bed through Bulgaria and Serbia to Western Europe and Italy.

The deal was signed by Russia's first deputy prime minister Dmitry Medvedev, widely seen as Russia's future president, and Serbian prime minister Vojislav Kostunica.

Talking to reporters after the signing ceremony, Medvedev said the document served both Russia and Serbia's interests and “lays the foundation for the regime of energy security in the unified Europe”.

South Stream would help Serbia assume a leading role on the regional energy market, Kostunica added.

The agreement comes a month after Russia and Serbia signed a sweeping energy security document, which saw Gazprom take 51 per cent in Serbia's largest oil and gas company, Naftna Industrija Srbije (NIS).

Bulgaria agreed to join the South Stream project last month, during president Vladimir Putin's visit to Sofia, although a host of details remains to be ironed out. Officials from Bulgarian state gas company Bulgargaz have said recently that they would meet with their Gazprom counterparts in the near future to discuss the plans to build and run the South Stream gas pipeline through Bulgarian territory.