Russian President Vladimir Putin Thursday signed an agreement in Athens with the prime ministers of Greece and Bulgaria to build an oil pipeline from the Bulgarian port of Bourgas to Alexandroupolis. The $1.2 billion pipeline would help relieve congestion through Turkey's narrow Bosporus strait. VOA's Barry Wood reports from Washington.

Vladimir Putin, left, Greek PM Costas Karamanlis, center, and Bulgarian PM Sergei Stanishev

President Putin hailed the deal as evidence of cooperation, friendship and partnership. Bulgarian Prime Minister Sergei Stanishev said the project should attract more investment to the region.

Construction of the 280-kilometer pipeline is set to begin next year and be completed within 18 months. Russian firms will control 51 percent of the venture, including pumping stations, storage facilities and loading docks. The pipeline will carry 700,000 barrels of oil per day. While most oil shipments will come from Russia there are expectations that Kazakh oil will also reach western markets via the Bourgas-Alexandropolis line.

Ted Ferguson, the president of the rival AMBO consortium planning to build a pipeline from Bulgaria through Macedonia to Albania's Adriatic port of Vlore, concedes that Bourgas-Alexandropolis now has an advantage.

"It [the signing] affects us in that you would think from that that they have oil pledged, etcetera. And it may be more difficult for us to get oil that has been pledged by others to this pipeline. On the other hand, I can't see how they could possibly build anything in 18 months. They haven't done any work on it, no matter what they broadcast. They haven't done an environmental impact study. They haven't done the engineering. They haven't ordered pipe," he said.

The new line will relieve congestion in the Bosporus Strait in Istanbul through which all tankers coming from the Black Sea to the Mediterranean must pass. The new line will do nothing to lessen Western Europe's already heavy dependence on Russian oil and gas and could actually boost it by increasing volume. Western Europe currently obtains a third of its oil and 40 percent of its natural gas from Russia.

The rival AMBO pipeline has not yet obtained a commitment of oil supply or financing. Ferguson says AMBO will begin an environmental survey along its planned 850-kilometer route in May.