Merkel keen to allay fears, build Baltic gas link

WIESBADEN, Germany, Oct 15 (Reuters) - Russia and Germany hope to build a trans-Baltic gas pipeline on time and are keen to allay the concerns of transit states over the project, German Chancellor Angela Merkel said on Monday.

"As far as the Nord Stream natural gas line is concerned, we've just intensively talked about that again in the German-Russian governmental consultations," Merkel told a news conference with Russian President Vladimir Putin.

"The project is politically desired. Where there are problems implementing it economically, we can help -- if political talks help. If investment conditions need clearing up, that must ensue at a company level," she added.

Russia's gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) has teamed up with Germany's BASF (BASF.F: Quote, Profile, Research) and E.ON EONG.DE to build the 5 billion euro ($7.12 billion) link, which will run from Russia to Germany under the Baltic Sea.

The Nord Stream project is run by Merkel's predecessor Gerhard Schroeder, who has been criticised at home for accepting a lucrative job from Gazprom soon after leaving the office.

Nord Stream is key to Gazprom's policies of diversifying export routes after its pricing disputes with Ukraine and Belarus led to major cuts in gas and oil deliveries to Europe over the past two years.

Russia supplies one quarter of Europe's gas and is also an important source of crude for the European Union.

Some countries, including the former Soviet Baltic republics and Poland have raised concerns about the environmental safety of Nord Stream, which recently agreed to change the route to place it away from the known World War Two munitions dump sites.

Poland is also concerned that it could be more vulnerable to cuts in Russian supplies of gas for its own use, once the Baltic route provides Moscow with an alternative to pipelines across Polish soil as a means of exporting gas to Europe.