Canada-based Teekay has signed an agreement with BG Norge to supply a floating production, storage and offloading (FPSO) unit for the Knarr oil and gas field in the North Sea.

Under the contract, the $1bn FPSO will be constructed by Samsung Heavy Industries in South Korea.

The FPSO will have a maximum production capacity of 63,000 barrels per day and will be delivered in the first quarter of 2014.

Teekay will begin operations on the field under a charter contract with BG that has a period of six to ten years, with extension options for up to 20 years.

The Knarr field, which is located in the Tampen area in the northern part of the North Sea, is expected to contain recoverable reserves of 70 million barrels of oil equivalent.