Russian President Vladimir Putin has ratified an agreement to write off $10 billion of North Korea's Soviet-era debt in a deal which is expected to facilitate the building of a gas pipeline across the closed-off state.

Russia's lower house of parliament approved the motion last month and Putin signed off on the settlement on Monday.

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The agreement to forgive 90 percent of North Korea's debt was first broached in 2012 and authorized just this year.

Under the latest accord between the two governments, North Korea will be able to repay the remaining $1.09 billion in installments over the course of the next 20 years.

Sergei Storchak, Russia's Deputy Finance Minister, told Russian media last month that the money could be used to fund health, education, and energy-related projects in North Korea, as well as to build a gas pipeline and a railway to South Korea.

Russia's top natural producer, the state-owned company Gazprom, has long planned to build a gas pipeline reaching across North Korea and into South Korea with the goal of shipping 10 billion cubic metres of gas annually.

North Korea and South Korea remain technically at war and divided by a highly militarized border.

However, Russia has been looking to diversify its energy sales with a larger focus on Asia and looks to fostering a relationship with North Korea as one of the steps to achieving this.

After decades of talk, Moscow also aims to solidify a deal with China in which Russia will supply gas to the densely populated nation.  

North Korea and the Soviet Union were strong allies during the Cold War and this won't be the first time Russia writes off the debt of a former ally.  

In 2013 the country also wrote off 90 percent of Cuba's Soviet-era debt in order to pave the way for more investment and trade between the two nations.