A former oil industry engineer-turned writer has been named the first-ever winner of a high-brow literary prize scooping £40,000 for his book of short stories.

George Saunders beat seven other writers including Irish debut novelist Eimear McBride and 85-year-old Jane Gardam who was shortlisted for her novel Last Friends.

He picked up The Folio Prize 2014 for his collection of stories, called Tenth Of December, at a ceremony in central London.

Writer Lavinia Greenlaw, who chaired the judging panel, said the winning stories were "both artful and profound".

She said: " Darkly playful, they take us to the edge of some of the most difficult questions of our time and force us to consider what lies behind and beyond them. His subject is the human self under ordinary and extraordinary pressure. His worlds are heightened versions of our own, full of inexorable confrontations from which we are not easily released. Unflinching, delightful, adventurous, compassionate, he is a true original whose work is absolutely of the moment. We have no doubt that these stories will prove only more essential in years to come."

Saunders, a Texan who now lives in New York, worked as a geophysical engineer in the oilfields of Sumatra before becoming a writer and university lecturer.

Andrew Kidd, who founded the prize, said all eight books would be " read with intense pleasure for decades to come".

He said: " In the winner, George Saunders' Tenth Of December, they have recognised one of the great writers of our age, and one of the undisputed masters of his form. It's a brilliant choice which boldly affirms the aims of the prize: to celebrate the most perfectly realised and thrilling storytelling of our time."

Jonathan Ruppin, from Foyles booksellers, said: " Saunders is one of the mercurial masters of the short story that Britain's disinterest in short-form fiction has prevented us from championing. These stories are satire as its most brutal, fiercely funny but also bitter about a dystopian future that already seems to be coming to pass. He's a deserved recipient, up there with Kurt Vonnegut."

The prize, sponsored by publishers The Folio Society, was open to any book published in the UK in 2013 and was set up amid concerns the long-running Booker Prize had become less serious with a focus on readability rather than literary merit.

Last year, the Booker announced that from this year it too would be open to writers regardless of nationality.

The five-member judging panel, including novelists Sarah Hall and Michael Chabon, read 80 books over five months.

Accepting his prize at the St Pancras Renaissance Hotel, the 55-year-old joked: "Wow. I'm glad I came."

He told reporters the win would boost his work, saying: "I was raised Catholic so I have low self esteem so the thing I've noticed is whenever I get something successful I sit up a little straighter and write a little better".

He said his win did not mean British writers could not compete for the literary world's big prizes, adding: "I think that any country that produces Zadie Smith and Martin Amis, you're good. It's nice to think that there's an answer but they come in waves".