The deal, which follows a preliminary agreement reached in May, ended months of tense arguments over the price of gas supplies. It reaffirms Russia's monopoly on gas supplies from Central Asia and deals a strong blow to Western hopes of securing alternate energy export routes.
"We have just signed an extremely important agreement between Russia, Kazakhstan and Turkmenistan on building the Caspian pipeline," Putin said. "It will become a new important contribution of our nations into strengthening the European energy security."
Late last month, Russia's state-controlled monopoly OAO Gazprom (GAZP.RS) gave in to Turkmen price demands and agreed to pay $130 per 1,000 cubic meters of natural gas in the first half of 2008 and $150 in the second half.
The agreement will likely disappoint the U.S. and the European Union, which have been lobbying for a rival pipeline to be built under the Caspian Sea, bypassing Russia.