Major discovery of oil announced in North Sea

The Catcher prospect, off the east coast of Scotland, is thought to hold up to 300 million barrels of oil, although Encore Oil said the outcome of further investigations could add "very significantly" to this number.

It would make Catcher among the largest discoveries in the UK North Sea since the billion-barrel Buzzard reservoir off Aberdeen in 2001.

The discovery could bring a 2bn tax boost for the UK's public finances.

Encore's chief executive Alan Booth said the company's Catcher drilling programme had so far delivered a "truly exceptional result".

He added: "Initial analysis of the seismic data, now calibrated by drilling, suggests that block 28/9 could possibly contain a series of discoveries that would form one of the larger North Sea oil accumulations of recent years."

A number of Encore's team were responsible for the discovery of the Buzzard field, which currently produces more than 10 per cent of the UK's total oil production.

Encore is the lead operator on Catcher and has a 15 per cent stake in the joint venture, alongside majority owner Premier Oil, Wintershall, Nautical Petroleum and Agora Oil & Gas, which is backed by Lord Rothschild.

The discovery is likely to boost interest in North Sea exploration at a time when big producers are turning their attention elsewhere.

Production in the North Sea has fallen from its peak in 1999 and several recent auctions of oil fields have seen disappointing levels of interest.