Cyprus, Greece, Italy, and Israel have signed up to a gas pipeline that would reduce EU dependency on Russia.
The EastMed pipeline is to ship up to 16 billion cubic metres (bcm) of gas a year from the Levantine Basin near Israel and Cyprus to Greece and Italy from 2025.
That amounts to just 5 percent of EU annual consumption, but it would offset the 100 bcm a year that the EU buys from Russia.
It could also pave the way for further investments in the gas rich Middle East.
IGI Poseidon, a joint venture by Italian firm Edison and Greek company Depa, is to build the 1,900-km pipeline - the longest underwater one in the world - at a cost of over €4 billion.
The European Commission is to contribute up to €2 billion in the name of energy security.
By contrast, it has criticised a new Russian pipeline, Nord Stream 2, to Germany.
The Cypriot, Greek, and Israeli energy ministers, and Italy's ambassador to Cyprus signed a memorandum of understanding on the EastMed project in Nicosia on Tuesday (5 December).
They said they aimed to sign an intergovernmental agreement next year.
They also said it would "secure a direct long-term export route from Israel and Cyprus to Greece, Italy and other European markets … strengthening the EU's security of supply".
Israeli energy minister Yuval Steinitz said: "It looks like a fantasy, a dream, because there is no parallel, there is no such long and deep underwater gas pipeline in the world, and now, we can understand that this is possible, viable."
Cypriot energy minister Yiorgos Lakkotrypis said EastMed would be a "very important pillar" of EU energy supply.
The Greek minister, Giorgos Stathakis, said "today we are making a major step forward" in a project that would be "strategically very important for Europe".
Italy was represented by its ambassador to Cyprus because the Italian minister had a problem with his flight, according to Cypriot news agency Cyprus Mail.
But Italian industry minister Carlo Calenda said in Rome: "We are the second largest manufacturing economy in Europe, the diversification and the quality of our energy sources are fundamental to the country and its competitiveness".
The EU is also investing in a gas pipeline to the Caspian Sea, bypassing Russia, and in liquid gas terminals to diversify sources.
The effort comes after a series of politically-motivated gas cut-offs by Russia in eastern Europe in recent years.
It also comes in a period of turbulence in EU-Russia and Nato-Russia relations after Russia invaded Ukraine.