KOREAN-owned oil heavyweight Dana Petroleum has highlighted its commitment to the North Sea after approving plans to bring a bumper field into production as the industry emerges from the downturn triggered by the crude price plunge.

Dana and Premier Oil gave the green light to the Tolmount project yesterday in a move that represents a notable show of faith in the potential of the UK North Sea on the part of international players.

Industry watchers expect the cost of the project to total round $600m (£470m).

A spokesman for Aberdeen-based Dana said: “We are delighted to be a 50 per cent equity partner in the Tolmount project which will deliver significant value to Dana and our shareholder and demonstrates our ongoing commitment to the North Sea.”

Premier Oil chief executive Tony Durrant said the sanction of the “high return” Tolmount project marked a major milestone for the firm and would underpin its UK production for years.

Tolmount is reckoned to contain the gas equivalent of around 100 million barrels oil. Production is expected to peak at around 60,000 barrels oil equivalent daily.

London-based Premier has interests in countries such as Indonesia and Mexico where the firm made a bumper find last year.

The development is the first that Premier has approved in the North Sea since deciding in 2014 to proceed with the Catcher development off Aberdeen.

The decision to approve Tolmount provides fresh evidence that industry players are prepared to invest in the North Sea again following widespread cut backs in response to the oil price fall between 2014 and 2016.

Shell and BP have approved significant North Sea projects this year.

The partial recovery in the crude price since late 2016, amid moves by major exporters to cut production to support the market, has boosted sentiment. Cost cutting moves have helped firms increase profitability.

Industry body Oil & Gas UK said the Tolmount project should provide a boost to the North Sea supply chain.

However, this may not be strong enough to provide much compensation for the pain suffered amid the downturn, during which firms shed thousands of jobs as the market shrank. Many went under.

The Tolmount field, which lies around 40 miles off Yorkshire, will feature a minimal facilities platform exporting gas to shore via a new pipeline. The gas will be processed at the Easington Terminal in Yorkshire.

Premier expects production to start in 2020.

Mr Durrant said it is on a similar scale to the 100m barrel Catcher oil development east of Aberdeen. Premier brought Catcher onstream in December with Cairn Energy on schedule and under budget.

The company had faced problems off Shetland developing the Solan field. This came onstream in April 2016 around 18 months later than planned.

The investment in Catcher was sanctioned in June 2014, during which the crude price peaked at $115 per barrel before growth in supplies ran ahead of demand.

Brent crude sold for around $72/bbl yesterday, against less than $30/bbl in the first quarter of 2016.

A range of firms have highlighted the potential of the gas-rich Southern North Sea recently including relatively small players working in the area, such as Independent Oil & Gas and Cluff Natural Resources.

Premier acquired its interest in Tolmount with the North Sea portfolio it bought from Germany’s E.ON for $120m in 2016. The Korea National Oil Corporation bought Dana for £1.9bn in 2010.

Dana and Premier have equal shares in Tolmount. Premier is the operator of the field.

Its share of the development cost is expected to be $120m. Mr Durrant said Premier has secured an innovative financing structure for the project which minimises its capital expenditure while maintaining exposure to potential upside in the Greater Tolmount area.

The private equity-backed Cats Management oil and gas infrastructure business and Dana will own and pay for the platform and pipeline and fund upgrades to the onshore terminal.

Oil & Gas UK said the project demonstrates the value of upstream and midstream operators working closely together to stimulate investment.