The 175-mile pipeline will transport Russian crude oil from the Bulgarian Black Sea port of Burgas to the Greek port of Alexandroupolis on the Aegean Sea coast near the Turkish border, the Bulgarian news agency SNA reported.
The pipeline, with an annual capacity of 35 millon to 50 million tons, is to bypass Turkey, whose Marmara Sea is crowded with vessels sailing between the Black Sea and the Aegean Sea.
Construction should begin in 2008 and the pipeline will be put into operation in 2010.
Russian President Vladimir Putin, Bulgarian Prime Minister Sergey Stanishev and his Greek counterpart Kostas Karamanlis signed the agreement Thursday in Athens on construction of the pipeline, which would cost $700 million to $900 million.
Russia's consortium of three state-owned energy companies will own a joint 51 percent stake in the company that will operate the pipeline and Bulgaria and Greece will have 24.5 percent shares each.
Parliaments of Russia, Bulgaria and Greece are to ratify the agreement.