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Dana Petroleum has announced that the first oil has flowed from its flagship £1bn Western Isles Development Project in the UK Northern North Sea.

The oil firm said the first production well had been completed and flow tested and three other wells had been drilled.

The work has been undertaken by the drilling rig Ocean Nomad, which has been leased from Diamond Offshore.

Dana said the first flow was "an important milestone" for both the project and the company.

Aberdeen-based Dana, which has a 77% stake in the project, will develop two oil fields called Harris and Barra.

It involves a subsea development of at least five production and four water injection wells tied back to a new build floating production, storage and offloading vessel (FPSO).

Production from the fields - which lie about 100 miles east of Shetland - is due to start in 2015 and is expected to bring 40,000 barrels a day onstream.

Dana Petroleum is owned by the Korean National Oil Corporation, with operations in the UK, the Netherlands, Norway and Africa.

In a separate development, Faroe Petroleum announced it had bought a 60% operated interest in the Ketch Field and a 53.1% interest in the Schooner Field in the UK Southern North Sea gas basin from Tullow Oil for an initial sum of £35m.