The decision about the Odessa-Brody pipeline, announced following a meeting between Ukrainian Prime Minister Yulia Tymoshenko and her Georgian counterpart, Zurab Nogaideli, is likely to complicate relations between the two former Soviet republics and Russia.
Viktor Yushchenko (l) greets Georgian PM Zurab Nogaideli (r)
Last summer, Ukraine's Cabinet agreed to open the long-idle pipeline for shipments of Russian oil to Odessa. But the United States has opposed that, saying it will increase Ukraine's energy dependence on Russia and raise chances of an oil spill as more tankers travel through Turkey's clogged Bosporus strait.
Georgia stands to benefit from the new deal because it will earn transit fees. And Georgia, like Ukraine, is interested in expanding its self-reliance compared to the regional energy power, Russia.
Russia is Ukraine's largest trade partner and energy supplier, while key Russian pipelines and other infrastructure links with Europe run through Ukraine.
Nogaideli traveled to Ukraine on Feb. 27 for a three-day trip and was scheduled to meet top Ukrainian officials, including President Viktor Yushchenko.
It was Nogaideli's first trip abroad since filling the post after the sudden death of Zurab Zhvania, who apparently fell victim to carbon monoxide poisoning.
Later in the day, Nogaideli and Yushchenko discussed boosting bilateral ties, and agreed to refresh an alliance of five former Soviet republics aimed at enhancing regional stability and encourage economic development.
The GUUAM group - comprising Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova - was established in 1997 in a bid to seek cooperation outside Russian influence.