Energy giant Royal Dutch Shell agreed an oil and gas exploration deal with Turkish state petroleum firm TPAO on Wednesday.
Shell will search for oil and gas offshore in the Mediterranean and onshore in southeast Turkey.
The agreement could heighten tensions with the Greek Cypriot government of Cyprus, which Turkey does not recognise.
It angered Ankara by launching exploratory drilling off the south coast of the divided island in September.
Turkey, the only country to recognise Turkish-controlled northern Cyprus, argues the operation should not take place whilst UN-backed talks to reunify the island are ongoing.