The Azeri company, SOCAR, was the only bidder for a 66 percent stake in Greece's DESFA, in a tender held in June. The deal is expected to be completed after regulatory approvals late next year.
SOCAR wants to use DESFA to increase its footprint in southeast Europe, Chairman Rovnag Abdullayev said at a signing ceremony in Athens. "This deal encourages us to further strengthen our presence in the region", he said.
Greece is struggling to meet privatisation targets set by the terms of international bailout. Its efforts have been hurt by lack of investor interest, red tape at home and regulatory obstacles from the European Union.
About 3.9 billion euros worth of privatisation deals have been signed since Greece's bailout began three years ago, raising about 2.6 billion euro in cash. It was supposed to have raised about 22 billion euros by the end of 2013, under the original terms of its bailout.
Greece plans to raise 3.56 billion from asset sales next year. But its privatisation chief warned earlier this week that it may not be able to sell natural gas retailer DEPA in 2014, as planned, because of lack of investor interest and regulatory obstacles raised by the European Union.
(Reporting by Harry Papachristou; Editing by Larry King)