HELSINKI—Finland and Estonia will start construction work on a gas pipeline linking the two countries in spring, the CEO of the Finnish project company involved said on Nov. 15.

The pipeline, which will help end Finland’s gas market isolation and could help reduce its dependence on Russian supplies, will be 75% funded by the European Union.

“From the government, we have received all the licenses which are needed. What we are waiting for is the water permits, which should come by the end of the year,” Herkko Plit, CEO of state-owned Baltic Connector, told Reuters on the sidelines of an energy conference.

“We will start the first construction onshore in spring. Offshore will start next summer. The Estonian company (Elering AS) is responsible for their part.”

The gas pipeline across the Gulf of Finland will connect the Finnish and Baltic gas grids, which are also expected to be linked with Poland at around the end of this decade.

The 150 km pipeline, with an 80 km offshore section, is expected to cost $296 million, with $221.4 million coming from the European Union, and the rest shared by Finland and Estonia.

Russia’s Gazprom is currently the sole supplier of pipeline natural gas to Finland. The EU is striving to reduce its reliance on Russian gas across its member states to improve the security of its supplies.

Construction of the new pipeline is expected to be completed by the end of 2019, with gas transmission to start in 2020.