The Emirates National Oil Company (ENOC) has agreed to buy the remaining 48.5% stake in Dragon Oil as it moves forward in the race to develop Turkmenistan's vast oil and gas reserves.
The acquisition for $1.89bn or $7.47 a share in cash will enable the company to buy the remaining stake in Dragon, for which it already owns a 51.5% stake.
Dragon Oil's main asset is the Cheleken contract area with probable reserves of 3.2 trillion cubic feet of gas resources and 645 million barrels of oil, in the Caspian Sea part of Turkmenistan.
Dragon Oil also holds minority interests in exploration in Yemeni acreage.
ENOC said that it would accept no offers for its Dragon Oil shares for a year to prevent counter bids for the company from taking place.
The acquisition will enable ENOC to focus more on oil exploration and production, and less on energy distribution, the company said.