UPDATE 3-Sweden, Finland approve Nord Stream pipeline plan

* Sweden, Finland govts approve pipelines in their waters

* Finnish environmental decision due by year-end

* Russia PM Putin thanks Finland, Sweden

(Adds reaction from Russian PM Vladimir Putin) By Simon Johnson and Eva Lamppu

STOCKHOLM, Nov 5 - A plan by Russian-German consortium Nord Stream to build a gas pipeline under the Baltic Sea cleared two major hurdles on Thursday as Sweden and Finland signed off on construction in their waters.

The European Union depends heavily on Russian gas supplies and the issue has become all the more acute due to tensions between Russia and Ukraine, which pipes vast amounts of Russian supplies to Europe.

A standoff between Russia and Ukraine late last year led to supply disruptions and European officials remain concerned that a dispute could again erupt this year.

"Sweden gives permission for Nord Stream to lay two pipes on the continental shelf within the Swedish economic zone in Baltic Sea for the transport of natural gas," the government said in a statement.

The Finnish government said in a separate statement: "The project must be implemented so as not to prevent any potential subsequent energy, data communications or other infrastructure projects."

It said the approval was valid for the next 50 years, after which it would have to be renewed.

Jubilant Russian Prime Minister Vladimir Putin, who has personally lobbied for the construction of Nord Stream in the last few years, thanked Sweden and Finland for their decisions at a government meeting in Moscow. The pipeline, which will deliver 55 billion cubic metres of gas per year from Russia to Germany via the Baltic Sea, still needs final approval from Finnish environmental officials, with a decision due by the end of 2009.

Denmark gave its assent last month, leaving Russia and Germany as the last countries to sign off. A Nord Stream spokesman said decisions from those countries are expected by the end of 2009.

CONSTRUCTION NEXT YEAR

Nord Stream, comprised of Russia's Gazprom, Germany's BASF and E.ON, has said construction on the pipeline should begin in April, with the line on track to begin operations by the end of 2011.

A second line should be completed in 2012.

Sweden said Nord Stream had agreed on a number of conditions to ensure that the project met environmental requirements both during and after construction.

"There are now several terms and commitments from the company to safeguard the Baltic Sea's environment, fishing and shipping," Environment Minister Andreas Carlgren said.

"According to national authorities the impact on the Baltic Sea's environment is very limited and only prevalent for a short while in connection with the construction work."

The pipeline project sparked a debate in the Finnish media in the past few months, with critics saying national security concerns were glossed over by the government.

But the Nordic country's four-party coalition government stood firm, saying it saw no geo-political concerns from the project, and could only object to it on environmental grounds. (Additional reporting by Darya Korsunskaya in Moscow)