MOSCOW, Jan. 21 (Xinhua) -- German Chancellor Angela Merkel arrived in Russia on Sunday for talks with President Vladimir Putin on relations between the European Union (EU) and Russia and the Middle East peace process.

    At the start of talks with Merkel, whose country holds the presidency of the Group of Eight (G8) and the rotating EU presidency, in Putin's summer residence in the southern resort town of Sochi, the Russian president expressed satisfaction over relations with Germany.

    "We are satisfied... satisfied with political contacts, with the growth of trade turnover and with developing cooperation in the humanitarian sphere. Cooperation does not simply continue, it expands," Putin was quoted by the Interfax news agency as saying.

    Merkel said she and Putin would discuss many issues and continue the discussion of the questions that began last year.

    "We rely on the understandings reached last year," she was quoted as saying.

    The Itar-Tass news agency, citing a high-ranking source in the Kremlin, said that a broad spectrum of issues will be discussed, including energy security and the launch of talks between Russia and the EU on a new partnership pact.

    Relations between the 27-nation EU and Russia have soured as Russia abruptly cut off delivery of its energy resources to neighbors over disputes.

    Due to a row over energy prices with Ukraine, Russian gas giant Gazprom cut gas supplies from a pipeline last year. Earlier this month, Russia briefly turned off a pipeline that delivers around 10 percent of the EU's oil over a dispute with Belarus.

    Other issues to be addressed at the Sochi talks included "the Middle East settlement, the development of the situation around Iran's nuclear program, in Afghanistan, and the state of affairs in the Balkans," the source said.

    It is Merkel's second major foreign trip this year following her visit to Washington earlier this month.