Greece and Italy sign agreement on Azeri gas

The Poseidon project is being promoted amid intensifying European debate over long-term energy supply and the diversification of sources of supply of natural gas.

The EU is the world's biggest energy importer, with outside sources, notably Russia, supplying 40 percent of its gas and a third of its oil.

The Italy-Greece project's significance is considered largely political, a demonstration of European will to reduce outside dependence, following a series of disputes last year between Russia and its former satellites over gas pricing that disrupted supplies. In January, the 27-member bloc unveiled a new energy action plan for cultivating non-Russian suppliers and alternative energy sources.

The euro300 million (US$390 million) link is one of a series of projects being promoted by the EU to reduce the 27-nation bloc's dependence on Russian natural gas, most of which is now piped through Ukraine. The EU will fund up to 40 percent of the cost.

The initial 8bn cubic meters of transmission capacity of the gas pipeline between Italy and Greece will be 80 pct reserved to Edison SpA and 20 pct to Depa for 25 years.

Baku-Tbilisi-Erzurum pipeline (Azerbaijan-Georgia-Turkey) delivering Azeri gas from Shah Deniz has been constructed. An additional arm linking Turkey and Greece will be attached to this pipeline in 2008, APA reports.