Speaking after the signing in Sofia, Putin said the deal will benefit European consumers by assuring new energy supplies. "I want to particularly stress that the construction of this new infrastructure does not mean a decrease in our cooperation with other transit countries," he said. "The creation of new routes ensures security, increases stability, and creates new transit capabilities for the growing supplies of energy resources to European consumers."
His remark appeared intended to address concerns in the EU that the pipeline could make member states still more dependent upon Russian energy than they are today.
Some 25 percent of the EU's natural gas already comes from Russia, fueling concerns in the union that Moscow is acquiring powerful economic influence over member states at a time when East-West tensions are on the rise.
Brussels has watched Moscow apply energy price hikes to governments in Ukraine and Georgia that try to move closer to the West. And those showdowns to the east have caused disruptions downstream in Europe itself.
But if those concerns are often heard in Brussels, Bulgarian officials did not seem to share them.
Bulgarian President Georgi Parvanov said that a "project of this kind means a lot more guarantees for the [energy] security of the region provided to and by all of our neighbor countries, as well as our European and international partners."
Prime Minister Sergei Stanishev told reporters earlier in the day that "with this project, Bulgaria's place on the energy map of Europe is guaranteed."
Speaking shortly after the cabinet held a hasty morning meeting to approve the deal, Stanishev said Bulgaria would have a 50 percent ownership share of the company that will construct and run the pipeline on Bulgarian soil.
South Stream Vs. Nabucco
The Bulgarian decision to sign the pipeline deal today came as an unexpectedly sudden end to what has been a hot debate over whether Sofia should move closer to Moscow by joining the pipeline project, dubbed South Stream.
Bulgaria is the EU's newest member and the pipeline is a potential blow to Brussels' declared hopes of reducing European dependence on Russian energy supplies.
The EU, along with the United States, backs building a pipeline that would help diversify Europe's supplies by connecting directly to the Caspian Sea region via Turkey. That pipeline, dubbed Nabucco, would bypass Russia.
But Nabucco has been delayed by political problems and economic uncertainty, providing Moscow with an opening to now build its own new pipeline to Southern and Central Europe.
EU spokesman Ferran Tarradellas Espuny told RFE/RL in Brussels that the union is not opposed to South Stream, but continues to consider Nabucco a priority.
"We consider that the South Stream is a pipeline that could bring supply from a traditional supplier to another part of the European Union -- so we have no opposition to that problem as it is," Tarradellas Espuny said. "But it is not considered a priority project for the European Union in the same sense as Nabucco could be.
"And I would like to underline why Nabucco is considered a priority project -- it's because it's going to bring gas from a nontraditional supplier through a different transport route," Tarradellas Espuny added. "So, in this sense, even if we have nothing to object to the development of a new pipeline that's going to increase our security of supply from a traditional supplier, we do not consider it a priority project in the same sense that we do with Nabucco."
Both South Stream and Nabucco have a projected maximum capacity of 30 billion cubic meters of gas a year. Analysts say, however, that once a pipeline is in place, adding extra capacity is relatively easy.
The South Stream pipeline -- jointly proposed by Russia's Gazprom and Italy's Eni -- is to carry Russian gas under the Black Sea to Bulgaria's port of Burgas. From there the gas would be piped in several directions: toward Austria, toward Greece, and toward Italy.
Russia has said it also wants to extend South Stream into Serbia and build a huge gas-storage facility there. That would make Serbia, a close Russian ally, a major hub for Russian energy supplies to Europe.
Gazprom has set up a joint venture with Eni to develop a feasibility study for the 900-kilometer, $10 billion South Stream pipeline.
The pipeline is the latest move in a chess game over energy that pits the EU against Russia politically, even as both sides need each other economically.
RFE/RL Brussels correspondent Ahto Lobjakas says the EU has been wary of antagonizing Russia, but Moscow has not been hampered by similar scruples. It has tried to strike bilateral deals with all the countries in the Nabucco project in an attempt to undermine its viability and supplant it with pipelines dependent on Russian gas deliveries.
Last year, Moscow signed a preliminary deal to supply Budapest with enough gas to make Hungary a major European energy hub. That was in rivalry to the Nabucco pipeline, which plans to terminate in a gas hub in Austria. Budapest was forced to back out of the arrangement after intense, if low-profile pressure from Brussels.
Battling Over Caspian Energy
But the playing field extends far beyond Eastern Europe.
Russia would like to be the main conduit to Europe not only for Russian gas but also for energy from the former Soviet republics. Putin scored a major victory early last year in a swing through that region to win support for planned construction of a new pipeline -- and the modernization of old ones -- to carry Turkmen and Kazakh natural gas to Russia and on to Europe.
Since then, Turkmenistan's new leader, Gurbanguly Berdymukhammedov, has signaled his country has enough gas to satisfy both Russian and European desires to secure supplies. But the East-West rivalry shows no sign of cooling.
In that context, it's no surprise that South Stream is controversial, even as the EU itself projects strong increases in its energy needs as its economy booms.
The last-minute decision by the Bulgarian government comes despite strong resistance to South Stream from opposition parties. Supporters of the right-wing Democrats for a Strong Bulgaria protested against the project on January 17 in Sofia's central park, where the first anticommunist demonstrations were held in 1988.
But the Socialist-led governing coalition appears to have been swayed by Putin's state visit to move quickly. Putin is in Bulgaria along with Gazprom Chairman Dmitry Medvedev, the man Putin hopes will succeed him.
During Putin's visit, both Russian and Bulgarian officials have emphasized the strong historical ties between their two countries. The Russian state delegation is marking a key Bulgarian anniversary, 130 years since the Russo-Turkish War of 1877-78. During that war, Russian forces liberated Bulgaria from five centuries of Ottoman domination.
Prior to the visit, the Bulgarian government had stalled in negotiations with Moscow by insisting it wanted a majority stake in the pipeline on its territory. Moscow had refused such conditions.
It remains unclear what prompted the Bulgarian government today to agree to a 50 percent stake.
Stanishev told reporters only that "until yesterday, the Russian side insisted on holding a 51 percent stake." He also said Putin deserved most of the credit for progress in the late-night negotiations.