LONDON  - Bahrain will host a Formula One Grand Prix until well into the next decade after announcing a long-term contract extension on Monday.

"The new agreement...underlines Formula One's commitment to the kingdom," Bahrain International Circuit said in a statement. "This now ensures that the country can incorporate the pinnacle of motorsport into its long-term plans for the development and growth of its year-round calender of events, as well as its leadership in the growing Middle East motor sport industry.''

Bahrain hosted the first Grand Prix in the Middle East in 2004 at a brand new $150million (£77million) circuit at Sakhir to the south of the island.

The statement said the 2006 race, the season-opener, generated $394million in direct income to the kingdom's businesses and traders. "Bahrain has not only built a venue that is among the very best in the world...but has also built foundations for the current growth of interest and investment in Formula One across the Middle East," said Formula One supremo Bernie Ecclestone.

Monday's announcement comes as F1 teams are preparing for a "Tribute to the Champions" demonstration event in the streets of Abu Dhabi at the weekend. Billed as the largest number of F1 cars and drivers ever assembled outside an official Grand Prix event, the cars will run around a specially-designed street circuit along the Abu Dhabi waterfront on Saturday.

Leading drivers taking part include double world champion Fernando Alonso, Honda's Brazilian Rubens Barrichello and Ferrari's new signing Kimi Raikkonen of Finland and Brazilian Felipe Massa.