The TAP pipeline consortium, led by Norwegian energy company Statoil and its Swiss counterpart, Axpo, said the environmental social impact assessment was approved by the Albanian government after 10 weeks of review.
"Having now secured our ESIA we can move to the next stage, obtaining the infrastructure permits needed for the construction phase," TAP's country Manager Albert Haak said in a statement.
The Greek government ratified an intergovernmental agreement with Albania and Italy early this week.
TAP is competing against the rival Nabucco West project for natural gas from Azerbaijan. Both pipelines are part of the so-called Southern Corridor, a European transit network meant to break the Russian grip on the region's energy sector.
A BP-led consortium working offshore Azerbaijan is expected by June to make a decision between the two pipelines.
TAP said the latest agreement with Albania means it would be ready to receive Azeri gas by late 2018.
Outrage over FERC decision on LNG exports
Huge investments needed offshore Britain