Turkey's state Anadolu New agency reports that both sides agreed on the transfer of natural gas from Azerbaijan through Turkey to European markets through the planned 1,240-mile Trans-Anatolian Pipeline, dubbed TANAP.
"Turkey's Prime Minister Recep Tayyip Erdogan and Azeri President Ilham Aliyev will sign the agreement (on the pipeline)," the agency stated.
The pipeline will be designed to carry natural gas from the BP-controlled Shah Deniz field in the Azeri waters of the Caspian Sea.
TANAP could link to Nabucco West, a scaled-down version of the larger $10.4 billion proposal, or BP's planned South East Europe Pipeline from the Turkish border.
Project partners expect to have TANAP built before Shah Deniz starts production by 2017. First exports from the second phase of the Shah Deniz field are expected by 2018.
The European Union aims to break the Russian grip on the regional energy sector through natural gas transit projects included in the so-called Southern Corridor. Nabucco is among the pipelines in that project.