Shell, the oil company being investigated after revising down estimates of its reserves, has gained access to Libya's oil and gas fields through a deal with the country's state-run oil company which could be worth up to $1 billion.
The signing of the agreement, which heralds Shell's return to the North African country after 15 years, came shortly before Tony Blair shook hands with Colonel Muammar Gaddafi, the Libyan dictator, signalling the thawing of relations between London and Tripoli.
The Blair-Gaddafi accord is expected to presage several new trade deals between Libya and British companies, many of which were forced out of Libya in the early 1970s, shortly after Col Gaddafi came to power and nationalised many industrial assets.
Today, Malcolm Bindred, the chief executive of Shell's exploration and production arm, said he was delighted by the "warm invitation" to work with the National Oil Corporation of Libya.
"I look forward to our co-operation becoming a cornerstone in a renewed trade relationship between the UK and Libya," Mr Bindred added.
Shell said that they had been working towards the deal since re-establishing a Tripoli office in 2001. Mr Bindred was reported as estimating the deal, which involves gas exploration off the Libyan coast, to be worth $200 million, although a spokesman for Mr Blair's office said it could eventually be worth $1bn.
Shell, which is keen to expand in gas, desperately needs to add reserves to its books and has long been keen to enter Libya where many of its smaller European rivals already hold exploration deals.
The agreement, which Shell said would begin a "long term strategic partnership", comes amid a difficult period for the oil company, which has twice admitted that its levels of it proven reserves were lower than it had reported.
The revisions have prompted investigations by authorities including London's Financial Services Authority and the Securities and Exchange Commission, the US financial watchdog.
Sir Philip Watts was ousted as Shell chairman earlier this month.
The first visit by a British prime minister to Libya since Winston Churchill 60 years ago is believed to be linked to strong trading benefits for Britain.
BAE Systems is believed to be in advanced talks on the development of "civil aviation facilities", an official from No10 Downing Street said.
Shell shares stood 2.5p higher at 357.75p in afternoon trade.
