"This agreement confirms Europe's direct access to gas from the Caspian basin," European Commission President Jose Manuel Barroso said in a statement after signing the deal with Azeri President Ilham Aliyev during a visit to Azerbaijan.
"This is a major breakthrough," he added.
Azerbaijan has committed to providing Europe with enough gas to enable the creation of a new corridor of pipelines via Turkey, known as the Southern Corridor, the commission said.
"This corridor is in our shared strategic interest," Barroso said in a speech prepared for delivery in Baku. "Azerbaijan wants to diversify its exports as much as the EU wants to diversify its imports."
"The Southern Corridor will give Azerbaijan reliable, physical access to the EU energy market, which is the world's largest," he added.
Three consortiums are vying to build the infrastructure to carry gas from Azerbaijan's Shah Deniz II gas field to Europe — pipelines known as Nabucco, TAP and ITGI — and the commission said Azerbaijan would decide in the months ahead which project to prioritize.
"We look forward to a swift allocation process for the Shah Deniz II gas field," Barroso said.
Barroso and the EU's Energy Commissioner Guenther Oettinger now plan to travel from Azerbaijan to Turkmenistan to discuss political and energy issues there.
The most ambitious of the Southern Corridor projects, the $10.5 billion Nabucco pipeline, says all six of its shareholders are in talks to secure gas and it aims to seal its first gas contracts by the middle of 2011.
The Nabucco pipeline is being designed to carry 31 billion cubic meters a year of Azeri gas across Turkey into southeast Europe and onwards to an Austrian trading hub.
Two other smaller projects — the $1.5 billion TAP and the $3.4 billion ITGI — aim to bring gas into Italy and onward into Europe by reinforcing and opening up existing infrastructure at much lower cost.
Nabucco's shareholders include Germany's RWE, Austria's OMV , Hungary's MOL, Romania's Transgaz, Bulgaria's BEH and Turkish state pipeline firm Botas.
TAP's shareholders are Germany's E.ON Ruhrgas, Norway's Statoil and Swiss EGL.
ITGI's shareholders are Edison, DEPA and Turkish Botas.
