A disused shipyard on Teesside will be used to construct a £300m offshore drilling platform.
Hundreds of jobs will be created to work on the project
Hundreds of jobs will be created to work on the contract at Haverton Hill, near Billingham, after the site was chosen by SeaDragon Offshore.
It will be the biggest non-military marine fabrication project in the UK, said regeneration agency One NorthEast.
The contract was awarded to the Tees Alliance Group, with work expected to begin in 2007.
Once complete, the platform will be used to drill for oil and gas in depths of up to 10,000ft in locations such as the Gulf, West Africa and the North Sea.
SeaDragon Offshore, a Cayman Islands company, has also announced plans to build two more identical vessels with Tees Alliance Group.
Stephen Baird, the firm's chairman, said he recognised that Teesside offered the skills to create a world class vessel.
Stockton North MP Frank Cook has been campaigning for the regeneration of the Haverton Hill yard.
He said: "For over 40 years I have used every possible opportunity to tell anyone who would listen about the superb industrial skills and facilities here on Teesside - and the opportunities available for those with the right managerial attitudes and outlooks.
"I am delighted the message I gave has helped to ensure the project is now set to become a reality - once again bringing Haverton Hill back to life."
The Tees Alliance Group, which includes firms Cleveland Bridge and Sarens Cranes, said a significant number of new jobs would be created, both directly and indirectly.