Britain's North Sea oil industry is "standing at the edge of a chasm", says an official report warning nearly half of the country's fields could face losses and closure at current low crude prices.
The annual UK Oil and Gas survey says over a hundred oil fields may cease production by the end of the decade. Current output levels could halve to nearly 800,000 barrels of oil equivalent per day by 2025, the report adds.
In its heyday in the 1980's, the North Sea produced more than 3.2 million barrels from a quarter of the number of fields.
The North Sea oil industry has been in decline since 2000 as it became harder to extract the remaining barrels and costs escalated while changes to the tax regime stymied investment. The current situation is described as precarious.
“With oil prices where they are, our big concern is that exploration activity and new investment is drying up in the North Sea in a way which bodes ill for the future of the basin,” Oil and Gas UK economics director Mike Tholen told The Wall Street Journal.
Only £1 billion ($1.41 billion) is expected to be approved for new projects this year, down from an £8 billion average in recent years, the survey says. As a result, total capital expenditure in North Sea production will be cut to £9 billion ($12.7 billion) compared £14.8 billion in 2014.
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After Brent crude declined, North Sea revenues fell by 30 percent by 2015. Most of the energy producers reduced spending and staff with major projects in high-cost regions put on hold. More than 90,000 North Sea jobs have been cut since 2014.