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Russia and Austria sign major gas deal

A deal between Austria and Russia that will see gas being piped around Europe via Austria by 2017 has been signed by heads of two major gas companies.

The news comes after the Russian gas giant Gazprom met in Vienna with Austrian partners last week, after which the company announced that they had agreed on a way forward to explore pipeline construction in Austria.

This has now been confirmed in an agreement signed by Vienna-based oil and gas company OMV CEO Gerhard Roiss and Gazprom CEO Alexey Miller in the Russian capital Moscow, according to a statement released by OMV on Tuesday.

Initial construction plans for the project suggest the gas pipe would arrive in Baumgartnen in Austria from Hungary on its way to Slovenia and the final destination in Italy. The pipe, which will have a capacity of 63 billion cubic meters, would come on land in Bulgaria from the Black Sea.

Talks has resumed between Gazprom and Austria in February of this year after a previous project Austria had been involved with - the Nabucco project - failed to win a bid to supply Europe with gas from Azerbaijan.

The agreement comes amid growing tensions between Russian and Europe over Ukraine as the European Union places further financial and travel sanctions on key Russian figures including Deputy Prime Minister Dmitry Kozak.

Austria's Chancellor Werner Faymann spoke out last week in support of moving away from additional sanctions on Russia and preferring a "de-escalation" approach.

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