The European Commission has signed a deal to invest €187 million (£166.43m) in a gas interconnector between Finland and Estonia.
The Balticonnector is the first gas interconnector which links the two countries and will allow Finland to enter the rest of the EU market as it is currently largely dependent on a single supplier.
The EU funding will cover 75% of the total construction costs.
It is expected to start operating by 2020 and 7.2 million cubic metres of gas per day are expected to flow in both directions.
EU Commission President Jean-Claude Juncker said: “Today’s signature shows that the European Union delivers and unites. It is the result of close co-operation and a proof of true European solidarity. We are doing more than linking gas systems of two countries.
“We are bringing people and Member States in the region closer together by building a pipeline that unites European countries. As part of the Energy Union, we are building missing energy links, uniting markets, improving security of supply and ending the energy isolation of Member States.”
The EU is also working on approving a law on emergency gas supply links between member states.
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