Russia and Norway have agreed a deal to divide up their shares of the Barents Sea.
The deal follows decades of negotiations between the two sides over how to divide the region.
The accord will allow companies to explore for oil and gas in the 68,000 square mile area.
The agreement has been approved by the two countries' parliaments and will be implemented on 7 July this year.
Russian Foreign Minister Sergey Lavrov and his Norwegian counterpart Jona Gahr Stoere ratified the deal during a ceremony in Oslo on Tuesday.
It splits the disputed part of the Barents Sea into two equally sized areas.
The region has become more accessible recently as global warming has caused the ice to melt.
Analysts say the melting ice could open up new, shorter, shipping routes between Russia and Norway and Asia.
Oil and gas reserves
State oil companies from both countries have expressed an interest in exploiting reserves in the region.
Russian owned Gazprom is already working with Norway's Statoil on the Shtokman field, 310 miles off the Russian coast.
"The potential economic benefits are enormous," said James Nixey, manager and research fellow for the Russia and Eurasia Programme from Chatham House on a visit to Norway.
"The significance of the deal is that it is widely recognised that the Arctic is a scene of future commerce and possibly future conflict," he added.
It will allow significant exploration of the region for the first time.
The US Geological Survey estimated in 2008 that the Arctic was likely to hold 30% of the world's recoverable, but yet to be discovered, gas and 13% of its oil.
"The expectation is that it has the potential to hold significant volumes of oil and gas because the area to the east of it has proven to be gas prone and the area to the west of it has proven to be gas prone," said Julian Lee, a senior energy analyst at the Centre for Global Energy Studies.
However, with so much of the Arctic unexplored the estimates are unreliable.
"There is always a tendency to talk these things up because that is how you attract investment, but it's probably far too early to say there are significant volumes of anything there until somebody looks for it," Mr Lee added.