Royal Dutch/Shell and Total have signed a long-awaited $2bn deal to develop Saudi Arabia's huge gas reserves.
The deal is the first for western energy firms for 25 years
The two are the first western firms to win energy rights in Saudi Arabia since the industry was nationalised in 1975.
The European firms will find and pump gas in 80,000 square miles of the vast south-eastern Empty Quarter desert.
Saudi Oil Minister Ali Naimi said the deal was the "first in a series" to promote industrialisation and economic development in the kingdom.
Saudi Arabia, the world's largest oil exporter, is also thought to have the fourth largest reserves of natural gas in the world.
The two companies will work in a consortium with Saudi state oil firm Aramco to explore, develop and produce the gas.
Shell will have 40% of the project while Total and Aramco will have 30% each.
The 25-year concession is a smaller project than the vast deals often associated with Shell and Total, two of the world's top five oil companies.
And it falls a long way short of the $20bn package Saudi Arabia originally envisaged, a deal which collapsed earlier this year when the sides could not agree terms.
As such, it amounted to a "missed opportunity", said Saudi billionaire Prince Alwaleed bin Talal, a nephew of King Fahd, who dubbed it a "token investment".
Still, the signing - coming only a week after the devastating bombing of a Riyadh shopping complex which killed at least 18 people - will be seen as a much-needed boost to the kingdom's efforts to attract foreign investment.
It also gives Shell and Total a key foothold in the country with the world's largest hydrocarbon reserves.
Saudi Oil Minister Ali Naimi signed the deal in Riyadh with Total chairman and CEO Thierry Desmarest, and Sir Phillip Watts, chairman of the committee of managing directors of Royal Dutch/Shell.
Mr Watts said exploration should start "without delay".
More bids invited
Mr Naimi said Saudi Arabia wanted to encourage more international oil companies to invest in the kingdom's gas sector.
He said the project was "the first of a series of energy projects based on the new investment environment in the kingdom".
Saudi Arabia will embark on a "series of investment projects" to promote industrialisation, bolster economic development and "enable the formation of lucrative and mutually beneficial long-range business partnerships", he said.
His country has invited bids "for other promising areas in North Rub al-Khali [Empty Quarter]", he said.
Mr Naimi has previously been seen as an opponent to the idea of opening up his country's reserves to foreign investment.