The state-owned Hungarian Development Bank set up a joint venture with the Russian energy giant Gazprom in Budapest on Friday, laying the groundwork for the construction of the local stretch of the planned South Stream gas pipeline. Russia hopes South Stream - seen as a rival to the EU-backed Nabucco pipeline project - will improve its access to energy-hungry European natural gas markets.

The Russian pipeline would cut the current transit country Ukraine, whose disputes with Russia over pricing have led to repeated interruptions to supplies, out of the supply chain.

Copyright Deutsche Presse-Agentur, 2010