* European Commission reviewing law
* Official says companies would be advised to wait fordecision
* Renzi says only Germany, Netherlands supported project (Adds quotes, detail)
By Barbara Lewis and Francesco Guarascio
BRUSSELS, Dec 18 (Reuters) - A plan to expand the NordStream natural gas pipeline from Russia's Baltic coast toGermany must comply with EU rules, European leaders said onFriday, while Italy urged the European Union to have the courageto block it.
Together with a group of Baltic and east European countries,Italy forced the plan to expand the pipeline, dubbed NordStream-2, on to the agenda at Friday's meeting of EU leaders inBrussels.
European Council President Donald Tusk said it would be upto the European Commission to make a final decision on legality,but in his view Nord Stream-2, backed by Gazprom, E.ON, Wintershall, Shell, OMV and Engie, flouted EU rules.
Russia's gas export pipelines have become intenselypolitical because of the conflict in Ukraine, the traditionaltransit route for shipping Russian gas to the EU.
The EU, which has sanctioned Moscow following its seizure ofUkraine's Crimea region, was expected to extend the sanctionsregime on Friday.
"It was a very tough, very emotional debate," Tusk said. "Weall agreed any new infrastructure should be fully in line withall the objectives of the EU, such as reducing energydependency, diversification of suppliers, sources and routes."
The EU's role, he said, was to be objective and avoid suchproblems being solved bilaterally rather than throughdiscussions involving all 28 EU member states.
Italian Prime Minister Matteo Renzi, who delayed an EUdecision on the renewal of sanctions against Russia to ensureNord Stream was discussed at the summit, said EU leaders had tohave the courage to block the expansion.
He said only Germany and the Netherlands had supported it."Germany and the Netherlands said that it's only a businessissue, while for us there is an important political value in thedoubling of Nord Stream," Renzi said.
Hungarian Prime Minister Viktor Orban also said a majorityopposed Nord Stream and asked why it was different from thealready abandoned South Stream project.
Citing EU legal issues, Russia last year said it wascancelling South Stream, that would have delivered gas tosouthern Europe, bypassing Ukraine.
"South Stream was blocked, and now it needs a reasonableargument at least why South Stream is bad and Nord Stream isacceptable," Orban said.
Gazprom and some utilities say Nord Stream-2 is the mostpragmatic solution to shoring up Europe's energy security. TheEuropean Commission has said it is assessing its legality.
A senior European Commission official, speaking on conditionof anonymity, said investors should see the Commission'sdecision before pressing on. "Anybody who wants to put in moneywill be well advised to wait." (Additional reporting by Alissa de Carbonnel, Robin Emmott andPaul Taylor; Editing by David Holmes)
