By Gabriele Steinhauser 

BRUSSELS--Germany's chancellor Friday defended a planned pipeline that would ship Russian natural gas to Northern Germany via the Baltic Sea and which European Union and U.S. officials fear could undermine the economic and political stability of Ukraine.

"I made clear, along with others, that this is a commercial project; there are private investors," Angela Merkel said following discussions on the Nord Stream 2 project with the other 27 EU leaders.

Russia's PAO Gazprom holds a 50% stake in the Nord Stream 2 consortium. The other 50% are held in equal parts by Royal Dutch Shell PLC, Germany's E. ON AG and BASF AG, Austria's OMV AG and France's Engie SA.

Officials in Brussels and Washington and the government in Kiev are worried that adding an extra 55 billion cubic meters in capacity to the existing Nord Stream pipes would allow Moscow and Gazprom to avoid shipping gas through Ukraine. Its position as a transit country for Russian gas to the EU has given Ukraine political leverage in its standoff with Russia and the government earns around $2 billion in transit fees every year.

Ms. Merkel said that a solution on Nord Stream should be found that would maintain Ukraine as a transit country. "That's the political wish, " she said.

The discussion Friday was triggered by Italian Prime Minister Matteo Renzi, European officials said. Asked about the standoff, Ms. Merkel said it was "normal" that EU leaders hold different views on certain issues from time to time.

"Italy would have liked to be involved in SouthStream," Ms. Merkel said, referring to an earlier Russian pipeline project that would have bypassed Ukraine on the South and which Moscow canceled a year ago amid pushback from the EU.

Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com

(END) Dow Jones Newswires

December 18, 2015 09:19 ET (14:19 GMT)