“There is a natural gas exploration deal worth $900 million (454 million pounds),” Shokri Ghanem, the chairman of state owned National Oil Corporation (NOC), told reporters.

He noted that the agreement had been negotiated and had not been the result of a bidding round.

The move is BP’s most significant Libya initiative since its assets there were nationalised by Libyan leader Muammar Gaddafi in the early 1970s.

The company said in January it was in talks with Libya on exploration and development opportunities that could lead to multi-billion dollar investment in the former pariah state.

Many foreign oil company interests in Libya were nationalised in the 1970s. Others pulled out when the United States imposed sanctions in 1986.

Ghanem was speaking as outgoing Prime Minister Tony Blair flew into to Libya at the start of a tour of Africa.

Blair’s office had earlier said that BP would announce on Tuesday it was returning to Libya in a move that it said recognised a warming of relations between London and Tripoli.

Libya has attracted considerable interest from international oil companies since 2004, when the United States and European Union eased sanctions following Libya’s agreement not to pursue nuclear, chemical and biological weapons.

Many of the sanctions were imposed on Libya for the 1988 bombing of a Pan Am airliner over Scotland, which killed all 259 people aboard the Boeing 747 jumbo jet and 11 residents of the town of Lockerbie.

At 3 p.m. British time, BP shares were up 0.5 percent at 570-1/2 pence, valuing the business at about 109 billion pounds.