The signing of an investment deal for a Baltic gas pipeline is the first step in breaking Russia's grip on Finland's energy sector, a European official said.

European Commission President Jean-Claude Juncker joined Estonian Prime Minister Taavi Roivas and Finnish Prime Minister Juha Sipila to witness the signing of a $203 million investment for the Baltic-connector, the first gas link between the two countries.

The pipeline will stretch 94 miles between both countries and eventually carry natural gas in both directions. First gas will flow through the infrastructure in 2020 and the European Union said the pipeline unites Baltic states with the rest of the European energy market.

"We are building missing energy links, uniting markets, improving security of supply and ending the energy isolation of member states," Juncker said in a statement.

With no large-scale commercial natural gas production of its own, the country relies entirely on Russia for its gas needs. The Finnish government aims to diversify its own energy sector with small-scale liquefied natural gas terminals to meet maritime and domestic demand for natural gas.

The European Commission early this year supported Finland's plans to grant $31.5 million to build a terminal for LNG at the Hamina port on the country's southern coast. The European body said the strategy is in line with regional efforts to improve energy security.

Russian energy company Gazprom is reviewing options for highly maneuverable gas shipments from Baltic states aside from pipeline commitments. Alexander Medvedev, the deputy CEO at Gazprom, said the company signed an agreement with Dutch supermajor Shell in early October to review marketing options for LNG from eastern European states bordering the Baltic Sea