Royal Dutch Shell and America's Exxon Mobil will proceed with the development of the giant Fram field 140 miles east of Aberdeen after getting the green light from the UK Government.
News of the proposed investment came on the day a Middle East-owned group announced it had made what may be a significant find north of Scotland.
Shell said the Fram development is one of the largest planned for the UK North Sea and among the biggest the company has completed in the area for more than a decade.
The partners hope to start producing 35,000 barrels oil equivalent from the field within three years providing what UK energy minister John Hayes said could be a significant boost for the country's production.
Shell expects the field to produce for 20 to 30 years. The project will be run from its Aberdeen upstream base.
"Fram itself will add around 2% to our oil and gas production – securing jobs, creating revenue and adding to our security of supply," said Mr Hayes.
He added: "The durability of oil production in the North Sea constantly confounds expectation."
Fram is the latest in a series of bumper investments in the North Sea sanctioned by giants who are looking to cash in on the strong demand for oil and gas amid rapid growth in countries such as China.
In February, Oil and Gas UK said firms would spend £31 billion on new fields and extending developments in the North Sea between 2012 and the end of 2015.
Advances in technology have transformed the economics of some fields that were previously considered uneconomic. Fram was discovered in 1969.
Glen Cayley, who heads Shell's North Sea business, said: "Fram is an example of a project that will slow the decline [of the North Sea]."
Shell and Exxon Mobil did not provide details of how much the Fram development will cost. Shell owns 32% of the relevant joint venture while Exxon Mobil has 68%.
However, Shell has shown its willingness to back multi-billion pound projects in UK waters. In October last year Shell and BP decided to proceed with the £4.5bn Clair Ridge development west of Shetland.
The latest investment provides another sign that the industry's biggest names will invest in the right projects in the North Sea, while selling off non core assets at the right price.
Mr Cayley said the decision to proceed was not affected by any of the changes made to the North Sea tax regime in recent years.
The Government has introduced a series of concessions after causing outrage in the March 2011 Budget by hiking North Sea taxes.
Separately, Abu Dhabi-owned TAQA Bratani said a well drilled from the North Cormorant platform in the Northern North Sea "encountered an oil accumulation that is expected to correspond to 10-30 million barrels of oil in place".
Shell does not provide details of its UK production levels.
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