REUTERS - European aerospace group EADS and a Saudi partner have won a contract to help boost Saudi border security worth billions of dollars, an official at the local partner said on Wednesday.

The deal is part of plans by the world's biggest oil exporter to bolster frontier surveillance with hundreds of extra radar facilities, coastal detection centres, telecommunications networks and reconnaissance aircraft.

Saudi officials have warned about escalating violence and sectarian fighting in Iraq and an insurgency against the U.S.-backed government in Baghdad.

EADS shares extended their gains after the news, rising 3.3 percent on the Paris bourse.

French weekly Le Point reported on its website the deal was worth 2.5 billion euros ($3.5 billion). EADS declined to comment, while a spokesman for the Saudi interior ministry could not be reached for comment.

France's Thales, Britain's BAE Systems Plc and U.S. group Raytheon had also vied for the contract.

"It was signed last night," the official at Al-Rasheed Trading & Contracting Co told Reuters, speaking on condition of anonomity.

In March, EADS and Al-Rasheed announced a first deal to install a razor-wire fence, thermal imaging and radar equipment along Saudi Arabia's 900-km (560 mile) frontier with northern neighbour Iraq.

"This deal covers the rest of the border. It involves much technology, radar, camera systems," the official said.

More projects might come up such as a deal possibly worth up to 1 billion riyals ($266.7 million) to secure a major border crossing point to neighbouring Oman, the official said.