Libya has signed a long-term agreement for the Western exploration of gas in the North African state.

Under the agreement, Royal Dutch/Shell would invest as much as $637 million to explore for gas in Libya. The accord also called for the upgrade of a liquified natural gas plant at Marsa Al Brega in a plan to increase LNG production to 3.2 million tons of a year.

"The National Oil Corporation of the Great Socialist People's Libyan Arab Jamahiriya [NOC] and Shell Exploration and Production Libya have reached a long-term agreement for a major gas exploration and development deal," Shell said in a statement on Tuesday.

Shell, which in March 2004 signed a long-term strategic partnership with Tripoli, said it would explore and develop five areas in the Sirte Basin, the focus of Libya's gas and oil production. The five blocks cover 20,000 square kilometers and work would begin immediately.