Anglo-Dutch company Shell is to develop a gas field with the Abu Dhabi National Oil Company.
The two companies will develop the Bab field, a potentially tricky project because it contains sour gas, a poisonous and foul smelling product.
The 30 year project, which could be worth about $10 billion (£6.5 billion), requires highly sophisticated technology to develop.
The deal was announced at the start of a visit to London by Sheikh Khalifa bin Zayed al-Nahayan, president of the United Arab Emirates.
ADNOC will own 60% of the Bab joint venture and Shell the rest.
The BBC reports Shell is now in a strong position to renew its role in the UAE's largest onshore oil concession, on which the Bab field stands, when that contract comes up for renewal early next year.
