Premier Oil said the Catcher area, located about 124 miles east of Aberdeen, is expected to produce 96 million barrels of oil with a peak production rate of about 50,000 barrels of oil per day.
The development project will involve drilling 22 subsea wells on the Catcher, Varadero and Burgman fields, which will be tied back to a leased floating production storage and offloading vessel.
The oil will be offloaded by tankers while the gas will be exported through the gas and liquids SEGAL system.
UK Energy Minister Michael Fallon said: "The Catcher area development shows that there continues to be an extraordinary level of interest in North Sea oil and gas, which is excellent news for industry and for the whole of the UK.
"The project represents over £1 billion of investment and almost all of the subsea expertise and equipment needed for this development is being supplied by British companies right across the country."
Premier Oil said that all major service contracts have been awarded and the project is now in the execution phase.
Its target is to extract oil by mid-2017.
Chief executive Simon Lockett said: "Having discovered Catcher in 2010, we are extremely pleased to have brought the Catcher area through the development approval process.
"Once on-stream, this project, which has been facilitated by the Government's small field allowances, will underpin our growing cash flows."