Russia has launched the construction of a new gas pipeline to Europe that will strengthen its dominant positions in the European energy markets.

The $12-billion Nord Stream pipeline would carry up to 55 billion cubic metres (bcm) of gas a year from Siberian gas fields 900 km over land and 1,200 km under the Baltic Sea from Vyborg in Russia to Greifswald in Germany.

Russian President Dmitry Medvedev, who flagged off the seabed construction on Friday, said the new pipeline would ensure stable Russian gas supplies to Europe and help avoid transit problems.

Russia supplies about 150 bcm of gas to Europe, meeting a quarter of its needs. The new pipeline will give Russia a stronger hold over Europe's energy supplies and reduce dependence on the transit countries, Ukraine and Belarus. Russia's Gazprom monopoly has teamed up with Germany's BASF, E.ON and Dutch Gasunie to build the pipeline.

Nord Stream will have two parallel gas pipeline legs.

The first leg will carry 27.5 bcm starting from 2011, and the second link is expected to be completed in 2012.

Construction was delayed as Russia had to seek permission from Sweden, Denmark, Germany and Finland, whose territorial waters the pipeline will cross.

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