Croatia, Romania, Serbia, Slovenia and Italy on Tuesday signed a ministerial declaration on supplying oil from the energy-rich Caspian region to the European Union.

The project, dubbed the Pan-European Oil Pipeline (PEOP), was "of strategic importance" for Croatia and other countries involved in its development, and the regional economy was expected to benefit from it, said Croatian Prime Minister Ivo Sanader after the signing ceremony.

Croatia's direct economic benefit, depending on the pipeline's capacity, is expected to range between 1.3 and 2.2 billion U.S. dollars, and Croatia's investments in the project would range from 550 to 980 million U.S. dollars, Sanader said.

The project would also significantly reduce oil tanker transport in the Adriatic, the prime minister added.

The PEOP, estimated to be some 1,856 kilometers long, will connect the Romanian port of Constanta and Trieste in Italy, running through Romania, Serbia, Croatia and Slovenia to the Trans-Alpine Line oil pipeline near Trieste.

The pipeline is expected to be put into operation between 2011 and 2013. It would effectively cut down on the number of oil tankers in the Turkish straits and Northern Adriatic.

The total cost of the PEOP project is estimated at 2.62 billion U.S.dollars if the pipeline's annual capacity is 60 million tons, or 3.96 billion U.S. dollars if its annual capacity is 90 million tons.

The declaration was signed at a forum on energy security, held in Zagreb as part of Croatia's presidency of the Southeast European Cooperation Process, a regional and non-institutionalized process co-ordinated by the presiding country.

European Energy Commissioner Andris Piebalgs, who also signed the declaration, said that global oil demand was expected to increase by 41 percent in the next 25 years, which underlined the importance of building necessary infrastructure linking markets with oil-rich regions.

The signing of the declaration was also welcomed by officials from other signatory countries, who cited the stability of oil supply from the Caspian region and possibilities of regional development as the main advantages of the project.

Slovenian Economy Minister Andrej Vizjak said the declaration should not be binding, but convey good political will.

"If the project is approved by experts, Slovenia will support it in view of the common energy policy," said Vizjak.