The pipeline, which is expected to begin operations in 2010, will run from the Northern Lights transmission route to Vyborg on Russia’s Baltic coast to Germany’s Baltic coast, where it will link up with mainland Europe’s gas pipeline system. From there, the gas can be imported into the UK via the interconnector.

Dr Paul Golby, chief executive of E.ON UK, said: “This is a massive engineering project costing E.ON hundreds of millions of pounds but it is also an essential project that will help ensure gas supplies to the UK for generations to come now that gas reserves in the North Sea are declining.”

Initially, one pipeline with an annual transmission capacity of around 27.5 billion m3 is to be built. This is expected to cost around €2.4 billion. A second pipeline could be added later doubling capacity.

The pipeline will be built by the NEGP Company, in which Gazprom has a 51% stake, and E.ON and BASF 24.5% each.