The 280-kilometer (175-mile) Burgas-Alexandroupolis pipeline will carry Russian oil via the Bulgarian Black Sea port of Burgas and Greece's Alexandroupolis on the Aegean to Europe, the U.S. and the Asia-Pacific region.
Russia's president, who held talks with the Greek and Bulgarian premiers in Athens Wednesday night, said before the signing ceremony Thursday, which he attended along with Costas Karamanlis and Sergei Stanishev, that the project would benefit all three countries involved.
"The step we are taking today has been necessitated by the interests pursued by Russia and Greece, as well as our partners' interests," Vladimir Putin said.
Putin said the pipeline would allow Russia to diversify routes and increase exports, and would make the Balkan states major energy transit hubs in Europe.
"I am positive that Russia's energy potential and the favorable geographic positions of Bulgaria and Greece open up prospects for broad cooperation, and provide new opportunities to turn Bulgaria and Greece into large regional centers to transit Russian energy resources to European and world markets," Putin said.
The deal was signed amid growing concerns in Europe over dependence on Russia, which meets about 30% of Europe's oil demand and 40% of its natural gas demand, and appeals to diversify energy sources.
Talks on the project, which had been on the table for more than 10 years, received a boost following Putin's intervention and pressure last year
The pipeline will pump 35 million metric tons of oil a year (257.25 million bbl), a volume that could eventually be increased to 50 million metric tons (367.5 million bbl).
Russia's state-controlled oil producer Rosneft [RTS: ROSN], state pipeline operator Transneft, and energy giant Gazprom [RTS: GAZP] will hold a total of 51% in the project, while Greece and Bulgaria will control 24.5% each.