Approval has been granted by the Department of Energy and Climate Change for a new £4 billion oil field off the coast of Shetland.
Aberdeen-based EnQuest is the majority owner of the Kraken oil field, which is estimated to contain as many as 140 million barrels of oil.
UK chancellor George Osborne revealed that the development is expected to create 1,000 jobs a year, as well as 20,000 positions during the construction phase.
"It is also evidence that our efforts to create a competitive tax regime that gets the most oil and gas out of the North Sea are working," he said.
Scottish energy minister Fergus Ewing stated that the development of the Kraken oil field is set to open up new opportunities throughout the supply chain.
EnQuest chief executive Amjad Bseisu added the approval for the Kraken field is a major landmark for his company.
Earlier in the month, new data from the Energy Information Administration, the US has produced more crude oil than it has imported for the first time since 1995, showing how the planet remains highly dependant on the commodity.
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