Oil & Gas UK has written to UK Chancellor Philip Hammond asking him to use his Autumn Statement later this month to boost investor confidence in North Sea exploration and production and to encourage new entrants into the market.

“We urgently need to see new entrants encouraged into the market and increased asset trading is one area that could boost activity in the North Sea by facilitating the trading of late-life assets,” said Oil & Gas UK chief executive Deirdre Michie.

The trade body said the North Sea oil and gas industry currently faces fierce global competition to attract investment amid the combined challenges of a low oil price, a maturing industry and uncertainty for the sector.

Oil & Gas UK’s recently published Economic Report 2016 found that investment in the UK continental shelf has fallen to around £9 billion this year, from a record £14.8 billion in 2014.

The trade body said less than £100 million of fresh capital has been committed to the basin this year, with only one new field approved — compared with five greenfield projects sanctioned last year with associated development capital at more than £4.3 billion.

It said: “These figures from the Economic Report 2016 demonstrate that urgent action is required if industry is to maximise the economic recovery of the up to 20 billion barrels of oil and gas equivalent still available in the North Sea.”

Michie added: “Sentiment and stability are important, and the chancellor has a real opportunity to use the Autumn Statement to send a clear message to investors that the UK Continental Shelf is a great place to do business.

“Exploration and development drilling has fallen to record lows and industry figures reveal a drought of new investment approved in 2016 and 2017 looks no better.

“I have asked Mr Hammond to get behind the UK’s oil and gas industry by providing certainty in our fiscal regime, recommitting to the Treasury’s ‘Driving Investment’ strategy for the sector and, as part of the UK’s new industrial strategy, recognising our supply chain as a key strength in the economy, with world leading capability – equally valuable as aerospace or the automotive sectors, for example.

“The UK oil and gas industry is much more globally competitive than it was two years ago.

“The cost of doing business in the North Sea has come down significantly and production has increased for the first time in 15 years thanks to the industry’s efforts to make its operations more efficient.”

Oil & Gas UK said it is asking the UK Government for four commitments as part of the Autumn Statement:

• Re-affirm its continued commitment to the ‘Driving Investment’ fiscal strategy which recognises the need for a more competitive, simple and predictable fiscal regime as the basin continues to mature
• Promote the increasing competitiveness of the basin as well as the capability of the UK’s oil and gas supply chain, both nationally and internationally, as part of the UK’s new industrial strategy
• Complete the constructive work on decommissioning tax relief over recent budgets by introducing measures to enable tax relief to be transferred upon an asset sale — this would unlock the trading of assets by encouraging new entrants to the market and freeing up new investment
• Introduce new measures to extend the Investment Allowance for operating expenditure that is aimed at increasing production from an asset or keeping it producing for longer — this could include investment in Enhanced Oil Recovery techniques