Oil & Gas UK chief executive Deirdre Michie (pictured) has welcomed the first rise in UK oil and gas production for more than 15 years — but she also warned the industry will be “extremely challenged” to sustain any progress amid rock-bottom oil prices.

Michie said the UK oil and gas industries will suffer more job losses in 2016.

However Michie maintained the UK Continental Shelf still holds “great promise for the future” with up to 20 billion barrels of oil and gas still to be recovered.

UK Government data for the first 10 months of 2015 showed the total volume of oil and gas produced on the UK Continental Shelf was up 8.6% compared with 2014, with the production of liquids up 10.6% and gas up 6.1%.

Oil & Gas UK predicted year end production for the full year of 2015 to between 7% and 8% higher than 2014.

“Given the difficulties being faced by the industry, this is welcome news,” said Michie.

“In February 2015 we predicted a marginal increase in production for 2015, but the industry-wide focus on improving production efficiency coupled with investments of more than £50 billion over the last four years to bring new fields on stream across the last 12 months is paying off and yielding a better result.

“The upturn underlines the industry’s commitment to the UK Continental Shelf — which still holds great promise for the future and is vital for the country’s security of supply.

“For example, only last week, oil company Taqa announced first production from the Cladhan field north-east of Shetland, estimated to produce 10,000 barrels of oil a day from the UK’s waters.”

Michie, though, warned of more tough times ahead for Scotland’s North Sea energy industries and the rest of the UK Continental Shelf.

“While the UK offshore oil and gas industry is having to adapt to the low oil price and driving greater efficiencies throughout its operations, the fact is that the value of our product has more than halved,” said Michie.

“Times are really tough for this industry and for the people working in it. We will continue to see job losses as we move into 2016 and we must be thoughtful and supportive of our colleagues and their families who are being made redundant or who are at risk of being made redundant.

“As we go through these times, we have to be resilient and focus on what we need to do to get us through the coming months to ensure an enduring industry for the future.

“Even in these challenging times, we continue to have a supply chain that is the envy of the rest of the world as a centre of excellence for offshore technologies.”

Michie said this supply chain generates tens of billions of pounds in domestic and export sales and has a workforce with expertise that is unsurpassed globally and whose skills will be critical in helping to unlock the remaining barrels on the UK Continental Shelf.

“With up to 20 billion barrels of oil and gas estimated still to recover, there is good opportunity ahead.”