"The Finnish government will make a decision in early November on the passage of Nord Stream in its economic area," said Vanhanen after meeting with Russian Prime Minister Vladimir Putin in Saint Petersburg.

"After that, the services in charge of the environment will give their authorization to the construction of the gas pipeline. We expect this to be done by the end of the year," he said.

The Nord Stream project, which is led by Russian state-run energy giant Gazprom in partnership with Germany's E.On Ruhrgas and BASF-Wintershall, will run under the Baltic Sea to bring gas from Russia to the European Union.

The pipeline will link the Russian city of Vyborg and Greifswald in Germany over a distance of 1,220km, going under the Baltic Sea and passing through Russian, Finnish, Swedish, Danish and German waters.

Denmark's energy agency approved the project on Tuesday, ruling out environmental concerns.

Finland and Sweden still need to approve the project, which is supported by Russia and Germany but criticised by Poland and the Baltic states, who claim that the project's sole aim is to circumvent them.

The European Union is looking to diversify its gas sources and supply routes to no longer fall pray to disputes between Russia, which accounts for 40 percent of its imports, and Ukraine, through which 80 percent of its Russian gas purchases transit.