Iran has agreed to build an oil refinery and petrochemicals plant in Senegal, according to a government statement issued in Dakar.
Carmaker Iran Khodro could soon be producing cars in Senegal
The deal follows a meeting with Iranian officials hosted by Senegal's President, Abdoulaye Wade, last week.
Iran also promised to speed up the development of a car assembly plant for state-owned carmaker Iran Khodro in the west African nation.
Foreign investors have been attracted to Senegal because of its stability.
It is the only country in west Africa not to have experienced a coup since independence. In March, President Abdoulaye Wade was elected for a second term.
His time in office since 2000, when he defeated the previous incumbent at the ballot box, has been marked by an investment in large-scale infrastructure projects.
Middle Eastern and Islamic countries are natural sponsors for the development of predominantly-Muslim Senegal, analysts say.
Last November, Iran pledged to invest $80m in a car plant in Senegal to be 60% owned by Iran Khodro, 20% by the Senegalese government and 20% by Senegalese private investors.