The new facilities will include 1,400 metres of new quay, with a water depth of up to 10.5 metres and will create an additional 125,000 square metres of lay-down area.

The construction contract with its preferred bidder Dragados UK is due to be formalised at a signing ceremony today.

Work on the extension, which will provide a facility for oil industry decommissioning work, will begin early in 2017 and is due to be completed in 2020.

Other improvements included in the expansion are aimed at attracting cruise ships to the port.

Aberdeen Harbour Board described the project as a “major new chapter” in the port’s history.

Board chief executive Colin Parker said: “We are delighted that, after six years of detailed planning and extensive consultation with our many stakeholders and the regulatory authorities, we are now in a position to approve commencement of construction.

“Aberdeen Harbour Board, in partnership with Dragados UK, a main contractor, will develop facilities over the next three years that will represent a step change in the marine support capabilities in Scotland.

“These will transform the port’s ability to accommodate the trend for larger vessels we are witnessing across a whole range of industries.

“The expansion will afford existing customers the opportunity to diversify and expand their interests, whilst attracting new customers and markets to the port, including up-scaled decommissioning activity, a more significant share of the available cruise vessel fleet and larger more cost-effective commercial vessels.”

Transport minister Humza Yousaf said: “This is excellent news for Aberdeen and the Scottish maritime industry, as the signing of the construction contract means this nationally significant project can now get underway in earnest.

“The significant investment will bring jobs and business to Aberdeen, supporting the local and national economy.

“The historic harbour will be transformed to accommodate larger vessels, opening up potential new revenue streams and offering customers world-class marine support facilities.

“These are exciting times for Aberdeen Harbour.”

An independent study, commissioned by Scottish Enterprise, estimates that the development will generate an additional £1 billion per annum to the economy by 2035, and will create an additional 7,000 equivalent jobs.

Funding arrangements for the project incorporated a £200m loan from the European Investment Bank, while there is also £36m in funding from the Aberdeen City and Region Deal and the local councils for improving roads around the new harbour.