Russia and Hungry on March 9 signed an agreement to set up a joint venture to build a new natural gas pipeline – the Hungarian leg of the South Stream pipeline that would bring gas from the Caspian Sea region to Europe. Under a separate agreement, Russia’s Gazprom will participate in the construction of an underground gas storage facility in Hungary, which would turn the EU member into a major hub for Russian supplies. The deals were signed following talks between the countries' prime ministers, Vladimir Putin and Hungary's Ferenc Gyurcsany.

Reports noted that by going ahead with the South Stream pipeline, Russia was seeking to undercut the Nabucco pipeline, which has been backed by the US and the EU to ease Europe's reliance on Russia for energy1.

• 1. “Russia and Hungary Sign Gas Pipeline deals,” Business Week, March 10, 2009, at http://www.businessweek.com/ap/financialnews/D96R9CIG1.htm