ExxonMobil will also conduct seismic studies off Trinidad's west coast at a cost of $5 million and provide training for state oil company employees.
The Caribbean country's energy minister, Eric Williams, said the agreement has the potential to increase production "by a factor of three" in the Soldado area in the Gulf of Paria, off Trinidad's west coast.
The state-owned oil company, Petrotrin, already draws some 35,000 barrels of oil per day from that area.
Seismic testing and geological studies will start next year and drilling is scheduled to being in 2005.
The company is "delighted to be once again involved" in Trinidad's energy sector, said Sam Conner, president of the oil company's Trinidad operations.
Officials at the company's headquarters couldn't immediately be reached for comment Tuesday night.
Conner also signed an agreement releasing ExxonMobil from financial obligations for failing to complete promised drilling off Trinidad's east coast, officials said.
The company had agreed to drill seven exploratory wells under a previous agreement, but in the end only drilled four, which weren't promising.
Trinidad's government could have applied a $42 million penalty on ExxonMobil for failing to complete the program, but instead allowed the company to spend $25 million on exploration in the new area, officials said.
"At the end of the day, what we want is the oil," Williams said.
Trinidad and Tobago's economy depends heavily on the oil-and-gas industry, which accounts for about a quarter of the gross domestic product. Petrotrin exports to the U.S. and other Caribbean countries.
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