Reuters: Gazprom, Serbia seen starting work on South Stream in July

"We expect to start works in July," Syromyatin was quoted by the Beta news agency as saying. He added that the loan carries a 4 percent interest rate.

Earlier, Srbijagas head Dusan Bajatovic said the company needed to secure 175 million euros ($238 million) to acquire its stake.

South Stream's proposed 2,500-km route stretches from Russia under the Black Sea through Bulgaria and Serbia to Hungary and now Austria. It bypasses Ukraine, through which almost half the gas Europe buys from Russia currently passes.

Europe is worried about its dependence on Russian gas, which accounts for around a third of EU imports, particularly after Russian-Ukrainian disputes in 2005 and 2009 led to supply disruptions. But the bloc has yet to come up with a realistic alternative.

The pipeline, aimed at carrying up to 15 percent of Europe's annual gas demand via the Black Sea by 2018, still lacks a number of important approvals to comply with EU legislation.  MORE