sarwesh

The UK offshore industry has admitted it faces a major challenge reaching the government target of recovering 25 billion barrels of North Sea reserves.

A report said that only about 10 billion barrels could be recovered at current levels of investment.

Oil and Gas UK - which represents major offshore firms - called for government tax incentives for companies willing to explore and develop new oil fields.

The industry said further investment is needed in exploration west of Shetland.

'National importance'

There are an estimated four billion barrels of untapped oil reserves off the Northern Isles.

Malcolm Webb, Oil and Gas UK's chief executive, said: "There is little doubt that the need to maximise recovery of the UK's remaining oil and gas reserves is a matter of national importance and one that is well understood by government at the highest level.

"Barrels left in the ground do not pay taxes, do not sustain jobs, do not help secure the nation's energy supply and provide no support to the country's balance of payments.

"We look forward to continuing discussions with the treasury on ways to increase the competitiveness of the UK oil and gas basin and how targeted incentives might boost investment in the UK's oil and gas reserves so that the nation can continue to reap the numerous benefits that flow from having a strong indigenous oil and gas industry for many decades to come."