South Stream is designed to supply natural gas to the Balkans and on to other European countries from Russia across the Black Sea.
The South Stream agreement with Serbia envisions transportation of 10 billion cu m of Russian gas annually, Gazprom CEO Alexei Miller said.
Russia's Gazprom Neft signed a deal on the purchase of a 51% stake in the Serbia state-owned oil monopoly Naftna Industrija Srbije (NIS) during talks between the two countries' leaders in Moscow.
Miller said Gazprom will not require any loans to finance the 51% stake.
"We have sufficient resources of our own," he said.
The chief executive said regardless of political developments, Gazprom will remain Serbia's reliable partner in energy deliveries.
Gazprom had reportedly offered $580 million for a 51% stake in NIS amid fears in Europe over perceived growing energy dependence on Russia.
Russian First Deputy Prime Minister Dmitry Medvedev has described the newly signed Russian-Serb energy agreements as "a brilliant breakthrough."
"The mutually beneficial investment that will be made as a result of these protocols ensures the interests of our countries, our peoples, and are ultimately aimed at strengthening the energy security system in Europe," he said.
The joint construction of a stretch of a natural gas pipeline with Russia's Gazprom under the South Stream project will turn Serbia into a regional economic leader, Serbia's prime minister said.
The South Stream pipeline proposed by Russia's Gazprom and Italy's Eni is a rival project to the Nabucco pipeline backed by the European Union and United States, which will pump Central Asian gas to Europe via Turkey bypassing Russia.
The pipeline will run from Russia's Black Sea coast under the sea to Bulgaria, where it will branch off to different destinations in the European Union, supplying 30 billion cubic meters of gas annually.
Serbia initially planned to sell a 25% stake in NIS for $300 million and oblige the buyer to invest another $250 million in the development of the company. The company is estimated as being worth $1.2 billion.