U.S. military officials say the Afghan government has approved a $1.9 billion pipeline that would link Kandahar with the provincial capital of Helmand.
The deal comes as the Taliban, which has controlled large parts of the country, has launched a military offensive against U.N. and Afghan forces.
The pipeline would provide up to 7 million cubic meters of natural gas a day.
The government said it will also provide a $100 million investment to the United States for a pipeline that could carry the gas to eastern Afghanistan.
Afghan President Ashraf Ghani said the pipeline is necessary to make sure the country remains economically stable.