Germany's new gas pipeline to Russia angers neighbours

Construction of a 744-mile gas pipeline linking Germany and Russia under the Baltic Sea began yesterday despite protests from Poland, Ukraine and the Baltic states which argue that they have been by-passed by the project.

The €4bn (£2.7bn) pipeline will join the Russian port of Wyborg with the German city of Greifswald. It is scheduled to come on stream in 2010, when it will provide vast supplies of Siberian gas to meet a projected doubling of Europe's gas demands over the next 10 years.

The project was agreed under a deal reached between Germany's former chancellor Gerhard Schröder and the Russian President, Vladimir Putin, in September last year.

Yesterday it was formally launched at a ceremony in the northern Russian town of Babayevo, when the first two sections of the pipeline were welded together.

Alexey Miller, chairman of the Russian gas consortium Gazprom, which is the main shareholder, described the pipeline as a "great European project" and as a "new export route that will increase Europe's energy security".

It was also announced that Mr Schröder, who was accused of timing the announcement of his pipeline deal with Mr Putin to boost his chances in Germany's September general election, will take up a post on Gazprom's supervisory board, where he will act as an adviser.

The project, which involves the German companies BASF and E.on, will exploit Russia's massive 48,000 billion cubic metre gas reserves, which account for at least a quarter of the world's total supplies. Germany receives a third of all its oil and gas imports from Russia.

Michael Glos, the German Industry Minister, said the project provided an important framework which would enable German and Russian concerns to "develop their energy partnership".

However the project has been strongly criticised by Poland, the Ukraine and the Baltic states, which claim that it in effect cuts them off from the new Russian gas supplies that will stem from the pipeline. Poland, in particular, has insisted that the pipeline was pushed through without either Warsaw or the rest of the EU being consulted.

Poland and the Baltic states had hoped that the pipeline would be built overland, through their territories, enabling them to profit from lucrative transit fees. Moscow's failure to route the pipeline through Ukraine has been interpreted as a punishment for the country's orange revolution last year, which caused Kiev to break its traditional links with Russia.

In Poland, newspapers have derided the deal as the "Schröder-Putin Pact". However Angela Merkel, Germany's new conservative Chancellor, sought to allay Polish grievances on a recent visit to Warsaw when she offered Poland the prospect of some form of participation in the pipeline project.