Russia and Germany have begun building a pipeline to carry Siberian natural gas under the Baltic sea between the two countries.

Officials from both sides Friday attended a ceremony at Babayevo in Russia's Vologda region to formally launch the project. Russia's natural gas firm, Gazprom, is building the pipeline with Germany's E.ON company and the BASF group.

The new pipeline will run from an existing natural gas facility to Vyborg on the Gulf of Finland. From there it will extend under the Baltic Sea to Greifswald in northeast Germany. Russia hopes it will start operating in 2010 with a capacity of 27 billion cubic meters of gas a year.

The pipeline is expected to cost nearly $5 billion.

Meanwhile, Russia's lower house of parliament, the State Duma, voted to allow direct foreign ownership of shares in Gazprom. The bill now goes to the upper house and then on to President Putin.

Some information for this report provided by AP and Reuters.