The prime ministers of Turkey and Russia have signed a number of agreements regarding co-operation on major oil and gas projects.
Turkey has granted Russian gas giant Gazprom use of its territorial waters in the Black Sea, under which the company is to construct its South Stream pipeline, which Russia hopes will become a principal supply route to gas markets in eastern and southern Europe.
In return, Russia has agreed to construct a pipeline across the Anatolian PeninsulaÔÇöits preferred system for getting gas from the Black Sea to the Mediterranean. Gazprom will also expand an existing Black Sea gas pipeline for possible supply across Turkey to Cyprus or Israel.
Russian prime minister Vladimir Putin signed the agreements with Turkish prime minister Recep Tayyip Erdogan during a visit to Ankara.
Italian prime minister Silvio Berlusconi was also present at the ceremony, as Italian energy firm ENI is GazpromÔÇÖs partner in the South Stream project.
South Stream will run from Russia to Bulgaria and completely bypass the Ukraine, through which 80 per cent of Russia's gas exports to the EU currently pass. This means Russia will be able to avoid cutting off the gas to its European customers should any disputes arise with the Ukraine.
Gazprom will now proceed with seismic and environmental tests in the Black Sea.
The deal will be seen as a blow for the EU and a u-turn from Turkey on its agreement last month to support rival project Nabucco, a 3,300km pipeline that would bring gas through Turkey from central Asia to Europe.
Nabucco, which cannot proceed without TurkeyÔÇÖs consent, could significantly dilute RussiaÔÇÖs strategic power on the global energy stage, as the pipeline skirts Russian territory thereby reducing EuropeÔÇÖs dependence on Russian gas.
The two countries also signed a deal on peaceful nuclear co-operation, which included an offer from Putin to build a nuclear power plant in Turkey.
In addition, energy firms in both Russia and Turkey agreed to a joint venture building electric power plants.
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