An agreement between the European Union and Iraq has been signed on Monday, paving the way to a closer cooperation between the EU and Iraq in a number of energy sectors.

The deal, which encompasses energy security, renewable energy sources and natural gas, will also reduce the EU's present dependency on Russian energy sources.

"Iraq represents a vital link for the EU's security of supply," stated EU Energy Commissioner Andris Piebalgs.

Concerned by the strong hand of Russia, EU member states have long sought to secure other energy sources.

This is the main strategic reason for the Nabucco project, a 3 000 km pipeline that will run from Turkey to Austria through Bulgaria, Romania and Hungary, and would also be capable of transiting natural gas from Iraq and other producers in the region.

In return for Iraqi benefits, the EU will help the country to design a new national gas development plan, improve the safety and reliability of its oil pipelines, develop its electricity grid, and identify sources and supply routes for gas from Iraq to European Union member states.

With the agreement successfully concluded, Piebalgs met with Iraq's Prime Minister, Nouri Al-Maliki and reaffirmed the EU's desire for a "long-term, mutually beneficial relationship" with Iraq.

Meantime on Monday, Russian officials have announced that exploratory work on the South Stream gas pipeline through the Balkans should be finished in time for construction to begin in late 2010.

Russia equally aims to diversify its transit options to Europe with the South Stream pipeline project, which will transit natural gas through the Balkans to southern Europe.

"By September-October, exploratory work will be completed, and all the documentation may be ready to allow us to begin work on South Stream by the autumn," Russia’s Deputy Prime Minister Viktor Zubkov has announced in the German city of Berlin.

Russian energy giant Gazprom last week created its first specialist project management team to oversee development of the South Stream pipeline, anticipating completion of the entire project by 2015.

The complete route for South Stream, however, has not yet been fully determined, as Serbia has expressed some concerns over the route for the 400 km section through its territory.