The Greek government and Gazprom, the Russian energy giant, reached a preliminary agreement on Wednesday to extend an existing natural gas supply contract to the year 2040.

The agreement was reached during a meeting between Greek Development Minister Dimitris Sioufas and Gazprom chairman Alexei Miller.

The two sides are expected to begin talks immediately with the aim of reaching a final agreement by the end of the year.

Gazprom supplies 80 percent of Greece's natural gas demands under a 1987 deal which terminates in 2016.

"We discussed the extension of the agreement to 2040 and confirmed the mutual will for the extension," Sioufas told reporters.

He praised Gazprom's credibility in supplying the country with natural gas, adding that their contracts were expected to expand to oil supplies as Gazprom had participated in the Burgas-Alexandroupolis oil pipeline project.

Russia, Bulgaria and Greece signed the pipeline deal last month. The 280km pipeline will connect the Bulgarian Black Sea port of Burgas with the Greek port of Alexandroupolis in the northeastern Aegean and is expected to transport 35 million tons of crude oil per year with the possibility of increasing output to 50 million tons.

Natural gas consumption in Greece is growing strongly, rising by 35 percent from 2003 to 2006 to a total of 3.1 billion cubic meters, and is expected to surpass 6.5 billion cubic meters by 2010, Sioufas said.