"The gas pipeline will provide a reliable fuel supply to European consumers, and at reasonable prices."

Medvedev was joined at the ceremony by Jan Peter Balkenende, the Dutch prime minister, and Gerhard Schroeder, the former German Chancellor, at Portovaya Bay in the Russian port city of Vyborg.

Supply sold

The Nord Stream gas pipeline will begin in Vyborg and run under the Baltic Sea through Russian, Finnish, and Swedish waters, ending in Greifswald, Germany, where the gas will be distributed to other European countries.

Gazprom, the Russian energy company, announced on Friday it had already signed up customers for the entire supply.

"All the gas volumes have either been contracted, or have been formalised in binding obligations," Alexander Medvedev, the deputy chief executive officer, said.

The $9.9bn Russian-German venture will carry 55 billion cubic metres of gas annually.

Russian gas supplies to Europe were stopped for almost two weeks in January 2009 while Russia and Ukraine argued over prices.

Such interruptions spurred European governments to look for alternative sources of gas.