The agreement was signed between Russia’s Energy Minister, Sergei Shmatko and Slovenia’s Energy Minister, Matej Lahovnik.
The EUR20 billion ($30 billion) pipeline is likely to be completed by 2015 and will run under the Black Sea to Bulgaria, Serbia, and Hungary before branching out to Western Europe.
Its total capacity could hit 63 billion cubic meters (2.2 trillion cubic feet) per year.
South Stream is one of two major pipeline projects that Russia is developing, with the aim of consolidating its commanding position in gas supplies to Europe. The other, Nord Stream, is to run under the Baltic Sea from Russia to Germany.
