The decision was forwarded to the Council of Ministers, the state-level government.
The European Bank for Reconstruction and Development has expressed willingness to financially support the project which the government in the Croat-Muslim entity considers of strategic importance for both Bosnian entities.
Connecting the Sarajevo-Zenica-Slavonski Brod gas pipeline would ensure the diversification of natural gas supply in Bosnia, which now gets this fuel only from Russia.
The project would additionally integrate the regional market in compliance with an agreement on the establishment of a Southeast European energy community and the European Union gas directive, the Federation government said.
The new pipeline between Zenica and Slavonski Brod would connect Bosnia's gas transport system with Croatia's and then Hungary's system.
The government said this project did not clash with existing plans for the development of gas transport systems in the two Bosnian entities.
Although the existing gas pipeline in Bosnia is entirely reliant on Russia, the authorities of the Serb entity last year decided that the entity should be connected to the South Stream pipeline, whereby gas is supplied also from Russia via Serbia.
Bosnian authorities have expressed an interest in participating in the Trans Adriatic Pipeline project, whereby natural gas for Europe would be supplied from Azerbaijan. One of its sections would cross Montenegro to Dubrovnik and Split in Croatia.