First oil to flow from 500 million-barrel field in 2019
The price of a barrel of oil hit a two-year high of $58.39 as the news was announced.
The first oil is set to flow from a 500 million-barrel field west of Shetland in 2019.
Regulators have approved Hurricane Energy's plan to develop the Lancaster field.
Up to 17,000 barrels of oil could be extracted each day, according to the developer.
The news came as the price of a barrel of oil hit a two-year high, peaking at $58.39 on Monday.
Hurricane Energy chief executive Dr Robert Trice said he was "delighted" by their progress.
'This is an important step in demonstrating the potential of basement west of Shetland and in the UK continental shelf more generally.'Hurricane Energy chief executive Dr Robert Trice
"With funding and regulatory approvals in hand, we can now fully focus on delivering the project within the target timeline of first oil in the first half of 2019," he said.
"This is an important step in demonstrating the potential of basement west of Shetland and in the UK continental shelf more generally," Dr Trice added.
The Lancaster field is believed to contain around 2.3 billion barrels of oil but less than a fifth of that - around 523 million barrels - is recoverable with current technology.
Scottish oil and gas was worth £17.5bn last year and production rose by 2.9%, largely as a result of projects commissioned before the oil downturn.
Production has plummeted over the last two decades, however, from 179 million tonnes in the 1998/99 financial year to 74.7 million tonnes in 2016/17.
Tax revenues also fell to -£312m last year, partly as a result of tax cuts intended to encourage investment in the North Sea.
Concerns have been raised over the region's long-term future, with a recent study from Edinburgh University warning that oil and gas could run out within a decade.