(Adds quotes)

ANKARA (AFP)--The leaders of four European Union countries and Turkey met here Monday to sign a landmark deal to build a gas pipeline reducing European reliance on Russia amid lingering questions on who will supply the gas.

Turkish Prime Minister Recep Tayyip Erdogan hosted the gathering, attended also by his counterparts from Austria, Bulgaria, Hungary and Romania, through which the 3,300-kilometer Nabucco pipeline would pass.

The U.S.-backed project, long delayed by lack of commitment from suppliers, is planned to become operational in 2014 at an estimated cost of EUR7.9 billion, with a capacity to pump 31 billion cubic meters of gas from the Caspian Sea to Austria via Turkey, bypassing Russia.

In a sign of the importance attached to the project, European Commission chief Jose Manuel Barroso, Prime Minister Nuri al-Maliki of potential supplier Iraq and U.S. special envoy for Eurasian energy Richard Morningstar attended the gathering.

Erdogan hailed the deal as a "historic moment," but stressed "the job is not done with the signing - on the contrary it just begins."

A quarter of all natural gas used in Europe currently comes from Russia, with several southern European countries depending almost exclusively on Russian supplies.

The Nabucco projects aims to avoid a repetition of the cut-offs which have recently disrupted supplies to Europe amid freezing temperatures.

"Russia is expected not to hinder directly or indirectly the Nabucco project," Bulgarian Prime Minister Sergey Stanishev said, urging the signing of complementary deals "in the shortest possible time."

The conduit is in direct competition with Russia's South Stream project, which will carry Russian gas through Bulgaria to Western Europe under the Black Sea.

Nabucco's primary potential supplier Azerbaijan, represented by its energy minister at Monday's meeting, insists it has enough reserves for the conduit, but last month it signed a deal to export gas to Russia starting in 2010, raising concerns among Nabucco proponents.

The project appeared to get a boost on Friday when Turkmenistan President Gurbanguly Berdymukhamedov said his country was prepared to supply Nabucco with gas.

Turkmenistan, along with Kazakhstan and Uzbekistan, had held off their support at a meeting in Prague in May.

Erdogan singled out Azerbaijan, Turkmenistan, Iraq and Egypt as countries seen as priority suppliers, but added that Iran and Russia might also join "when conditions allow" in the long term.

However, Iran's participation is opposed by the E.U. and the U.S.

Officials say the signing of the intergovernmental agreement Monday would serve to boost the project's credibility and lead gas exporters to think seriously about supplying the pipeline.

Two European banks have expressed readiness to finance the project, but analysts say securing the cost could be difficult amid the global economic slowdown and uncertainty over suppliers.

The signing of the agreement has been delayed also by Turkish demands to use 15% of Nabucco's gas for domestic use or even for re-export.

E.U. officials said Ankara's concerns were to be addressed by an arrangement, under which the pipeline would operate both ways, giving Turkey access to European stockpiles in times of need.

Erdogan, whose country is seeking to join the E.U., said the pipeline "will elevate Turkey to a significant position" in European energy security and help boost his country's struggling membership bid.

Barroso praised Turkey's role, saying the project "could open the door to a new era in relations between Turkey and the E.U., and beyond."

"What we are witnessing today is a powerful illustration of the strategic bonds between Turkey and the E.U.," he said.

The pipeline's shareholders are Austria's OMV AG (OMV.VI), Turkey's Botas, Bulgaria's Bulgargaz, Hungary's MOL Nyrt (MOL.BU), Romania's Transgaz and Germany's RWE AG (RWE.XE).