Energy Minister Brian Wilson has given official approval for a major oilfield which is expected to create around 1,000 jobs.
The first phase of the Clair field is to be developed 46 miles west of the Shetland Isles.
Mr Wilson says the field brings the total capital investment in the North Sea to £1.5bn over the past two months, and £1bn in the past fortnight.
He says the Clair field is the largest undeveloped UK Continental Shelf resource discovered so far and lies in water up to 150 metres deep.
The field's remote location has been a severe test to the companies involved - operator BP and other partners Conoco, ChevronTexaco, Enterprise Oil and Amerada Hess.
Mr Wilson says: "With a project value of £650m, this approval will provide a great boost for the UK.
"In total, Clair will create around 1,000 jobs, 850 of these in construction, and the rest offshore.
"This news demonstrates that there is a lot of potential left in the UK offshore industry, based on innovation and technology.
"In years to come, this first phase of development will supply almost 300 million barrels of oil, making it the largest development since the Elgin/Franklin project, which was approved in April, 1997."
Mr Wilson told an audience of industry representatives at the Aberdeen Maritime Museum: "Dependent on phase one results, further development of remaining field areas could follow."