OSLO, March 26-- Britain and Norway have agreed to build the world's longest sub-sea power cable that will connect the two countries' electricity markets directly for the first time, Norway's Statnett said on Thursday.

The ownership agreement between Statnett and Britain's National Grid signals the start of the construction phase for the 730 km interconnector, which has a planned capacity of 1400 MW, the Norwegian power grid system operator said in a press release.

The electricity cable would run from Blyth in Northumberland to Kvilldal in Rogaland on the Norwegian side. The project is estimated to cost around 1.5 to 2 billion euros (1.6 to 2.2 billion U.S. dollars), which is to be shared jointly, and it is planned to be completed by 2021.

"We are proud to be part of this project. Not only is this a technically impressive project where we will set a new world record, it is also an important contribution to facilitate renewable energy production on both sides, and thereby an essential part of the future electricity system," Statnett CEO Auke Lont said.

Alan Foster, director of European Business Development for National Grid said that access to low-carbon energy from Norway hydro power stations will help Britain meet the challenge of greener, affordable energy.

"It also adds to the diversity of energy sources for UK and potentially can reduce peak prices with benefits for consumers and businesses," he added.