* Contract expected to generate $1.8 bln in rev

* Anadarko, Diamond agree to dismiss all claims on a rig (Rewrites paragraph 1, adds detail on rigs, industry context)

May 17 (Reuters) - Rig contractor Diamond Offshore Drilling Inc said two of its drillships will be contracted to oil and gas producer Anadarko Petroleum Corp for up to $1.8 billion, the latest in a spate of deepwater deals spurred by higher crude oil prices.

The companies also agreed to dismiss all claims related to Anadarko cancelling a contract to use Diamond’s Ocean Monarch rig citing last year’s oil spill in the Gulf of Mexico.

Demand in emerging markets and declining production in mature oilfields in the North Sea and Mexico are expected to spur offshore oil drilling, resulting in a flurry of deepwater contracts such as the $1.1 billion deal DryShips Inc won from Brazil’s Petrobras .

Following a one-year standstill in the U.S. Gulf, companies including Anadarko are looking to secure permits to drill in the area as regulatory uncertainties have been lifted.

Diamond’s Ocean BlackHawk and Ocean BlackHornet drillships are each contracted with Anadarko for five years, starting in late 2013 and early 2014, respectively.

The drillships are being designed by South Korea’s Hyundai Heavy Industries Co for operations in up to 12,000 feet under water.

Diamond’s shares edged up more than a percent to $71.17 before the bell on Tuesday. They closed at $70.32 on Monday on the New York Stock Exchange. (Reporting by Swetha Gopinath in Bangalore;Editing by Vyas Mohan) (swetha.gopinath@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 580; Reuters Messaging: swetha.gopinath.reuters.com@reuters.net))