The Yamal-Europe pipeline runs from northwest Siberia to Russia's border with Belarus, and from there extends 2,000 km (1,240 miles) to Germany, via Poland.
"Start building the second line, and if you are afraid it will be unprofitable, we will exempt you from transit taxes for five years," the president told a news conference.
The addition of a second leg to the Yamal-Europe pipeline has been discussed since 2005, to meet Europe's growing gas demand.
The Belarusian segment of the Yamal-Europe pipeline is 575 km (360 miles) long, and has capacity of around 33 billion cubic meters per year.
Gazprom's May 18 deal to buy 50% in Belarusian pipeline operator Beltransgaz for $2.5 million in four equal installments by 2010 is expected to tighten the Russian gas monopoly's operational control over the Yamal-Europe pipeline, thus far its main export route to Central Europe.
