The European Commission has allocated €187.5m ($209.7m) for the construction of gas pipeline between Finland and Estonia in a bid to unite the energy markets.

The first Estonia-Finland gas pipeline, Balticconnector, is designed to create a regional gas market in order to end Finland’s dependence on gas imports from Russia.

European Climate and Energy Commissioner Miguel Arias Canete said: "Diversifying energy sources and routes, and uniting the energy markets, is at the heart of the Energy Union.

“This is key to ensuring secure, affordable and sustainable energy for all EU citizens.”

Planned to be built jointly by Baltic Connector and Elering, the pipeline will link the Finnish gas grid to the Baltic States, and further to Poland.

Finnish Baltic Connector is a project company established by the Finnish government while Estonian Elering is the operator of the country's gas and power grid.

Canete added: “What the Commission has started with the Poland-Lithuania pipeline (GIPL) we are now pursuing with the support to Balticconnector – promoting a chain of projects that will end the gas isolation of north-Eastern Europe and develop the Baltic regional energy market."

EC said that the investment corresponds to 75% of funding required for the development of the pipeline project.

In 2015, the Finnish government decided to build the 144km long pipeline, which is scheduled to be commissioned by December 2019.

The decision comes despite the pipeline’s majority state-owned gas utility Gasum exiting from the project amid plunging domestic demand, reported Reuters.

Finland currently depends on Russia's Gazprom for natural gas imports.

Image: Finland intends to reduce dependence on gas imports from Russia. Photo: courtesy of European Union.