The UK Government gave consent for Total and Dong Energy to develop the Laggan and Tormore gas fields, which lie in 600 metres of water and in one of the most hostile environments in the UK.

These will be the first gas fields to be developed in UK waters at this depth and will produce more than 1 trillion cubic feet of gas in the course of the field’s life.

The Industry and Government Taskforce to examine the potential for new infrastructure in the area and the Government's recent tax change to support the development of remote, deep water gas fields have been significant factors in bringing this project forward.

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Business Secretary Lord Mandelson, visiting Aberdeen today, said: "The announcement today that this £2.5 billion investment is going ahead is a major win for the Shetlands, for Scotland and for the UK.

"The new investment will involve a new gas processing terminal which will create up to 500 jobs in the Shetland during construction and the project overall will support about 2,100 UK jobs during its lifetime.

"It will be a major technical challenge developing the deepest gas fields to date on the UK continental shelf, Laggan and Tormore. I congratulate everyone involved for their hard work and for bringing on stream this very ambitious and worthwhile project."

Energy Minister Lord Hunt said: "This is a huge step forward for the wider development of the West of Shetland area which still contains about a fifth of the UK's oil and gas reserves.

"As we make the transition to a low carbon future, we must ensure we have secure energy supplies by making the best use of our indigenous energy through projects like Laggan and Tormore."

(CD/GK)