An Israeli defense industry source said that under the agreement signed in Israel on Tuesday the drones would be assembled in Russia.

Russia has been seeking a second purchase of Israeli-made spy drones roughly twice the size of an initial $50 million sale announced in April 2009.

“This is a huge step toward deepening cooperation between IAI and Russian industry. This agreement will also strengthen the bilateral relationship between Israel and Russia,” the two companies said in the statement.

Russia’s war with neighboring Georgia in 2008 exposed an army with largely obsolete equipment and a lack of modern spy drones, defense analysts said.

While Georgia used Israeli drones during the five days of fighting, Russia had to rely mainly on its Tu-22 strategic bombers for battlefield intelligence.

The drone deals help improve Israeli ties with Russia, an important country in international efforts to contain Iran’s nuclear program.

Russian President Dmitry Medvedev last month banned the delivery of the S-300 air defense missile systems and other weapons to Iran.

Israel and the United States long lobbied Moscow to scrap plans to sell Tehran the high-precision missile systems, which analysts say could help the Iranians defend their atomic sites against possible military strikes.