The second stage of the agreement is for a 393-kilometre (nearly 250 mile) section of a pipeline that will run from Jordan's Red Sea port of Aqaba to the Rihab power station in the north of the kingdom, near the Syrian border.

From there the pipeline is due to be extended to the Syrian port of Banias and the Lebanese refinery of Zahrani in 2005, and then Cyprus and Turkey in 2006.

The pipeline, with a capacity of 10 billion cubic metres (353 billion cubic feet) a year, is aimed at bolstering Arab economies and joint action, Jordan's King Abdullah II said after the signing ceremony.

Speaking at a meeting with the prime ministers of Egypt, Syria and Lebanon - Atef Obeid, Naji Otri and Rafik Al Hariri respectively - the king said Arab countries should launch more similar projects to face economic challenges.

The deal was also signed by Jordan's Energy Minister Azmi Khreissat and a representative of Al Fajr Company, a Jordanian-Egyptian joint venture.