Shell has agreed a major gas exploration and development deal with Libya and its state oil company.
Investors in Shell said they welcomed the Libyan deal
The deal could eventually see Shell producing more than 100 million barrels of oil equivalent from the country.
Anglo-Dutch firm Shell will spend $105m-$450m (£55.5m-£238m) on upgrading a Libyan gas plant and $187m on exploration.
The deal is seen as key for Shell, as it tries to rebuild investor trust after overstating its reserves.
The deal announced on Tuesday follows an initial agreement in 2004 to forge a long-term partnership with Libya.
As part of this latest deal, Shell has gained the right to explore for gas in five blocks covering 20,000 square kilometres at the heart of Libya's major oil and gas producing Sirte Basin.
If it finds enough gas, Shell and the North African state's oil company, National Oil Corp (NOC) will build a new liquefied natural gas (LNG) plant.
Shell has also agreed to expand the LNG plant at Marsa al-Brega on the Libyan coast, to enable it to produce 3.2 million tonnes of LNG annually, up from the 0.7 million tonnes it currently produces.
"We are delighted to be back in Libya," said Shell's executive director for exploration and production, Malcolm Brinded.
"Libya's integrated gas industry has enormous potential, based on its large gas resources and favourable geographic location."
Other oil firms active in Libya include Occidental Petroleum. It was among a handful of American companies which won Libyan exploration licences in an auction in January.
'Big cat' field
Investors have welcomed the news, particularly as Shell replaced less than half the oil and gas it pumped last year with new reserves.
"The jury is still out on their efficiency in finding oil but any good news they can come up with on this front is very welcome," said Richard Lewis, fund manager at New Star Asset Management, a holder of Shell shares.
Shell's head of oil exploration, Matthias Bichsel, said: "We believe it is a material opportunity that is in line with our big cat exploration strategy."
In Shell terms, a "big cat" field is one where Shell's share of the recoverable resources is more than 100 million barrels of oil equivalent.
LNG, gas cooled to a liquid at low temperatures, is a fast-growing part of the energy market.