Russia, Greece and Bulgaria will sign an agreement next week to build an oil pipeline between the Black Sea and the Aegean, bypassing the congested Turkish straits, the Kremlin said on Tuesday in a statement quoted by news agency Reuters. The statement said the three governments would sign the deal on the pipeline running from the Bulgarian port of Burgas to the Greek port of Alexandroupolis during Russian President Vladimir Putin's visit to Athens on March 14-15.

In Sofia, the Bulgarian government said in a statement prime minister Sergei Stanishev will attend the signing. The three states have been discussing the pipeline for about a decade but Russia has pushed for a deal since winning Greek and Bulgarian agreement that three Russian state-controlled firms would share control of the pipeline, said Reuters.

For years, the three governments disagreed on key issues such as who would build the pipeline, the ownership of the terminals and transit fees. They said last year that the project was finally approved and would be launched in 2009. Oil producers Rosneft and Gazprom Neft and crude oil pipeline monopoly Transneft will now share 51% of the pipeline, ensuring Russia is in command. Greece and Bulgaria will share the remaining 49%.

According to Reuters, Sofia plans to hand its stake to state firms Bulgargaz and Transexportstroy but has said it could sell some or all of its share to oil majors such as KazMunaiGas or Chevron. Greece will participate with Hellenic Petroleum , Latsis group and the Greek unit of Gazprom, Petroleum Gas. The first stage of the 700 mln euro pipeline will pump up to 200,000 barrels of Russian oil per day onto the Mediterranean market. A second stage could increase that volume to 700,000 bpd from around 2011.

The agreement to build the pipeline could have a positive knock-on effect for another project, the Chevron-led Caspian Pipeline Consortium (CPC), which pumps oil from the Caspian Sea to the Black Sea, said Reuters. Russia has long resisted CPC's request to double the pipeline's capacity to around 1.4 mln bpd to accommodate rising oil production from Kazakhstan. Last year Rosneft, which is a shareholder in CPC, said it would only support the expansion of CPC if construction of Burgas-Alexandroupolis went ahead.