High costs of operations make North Sea oil industry less competitive despite the region’s resources offering enough for more than 40 years of oil extraction.
In a report published today, multinational service firm PwC urged the sector to work towards significantly reducing costs, by billions of pounds, and seek a new vision and new ways of working in order to remain competitive.
Increasing costs were said to be a "defining feature of the UK North Sea oil industry", with the report warning these are "likely to rise still further" as firms try to extract the remaining oil and gas reserves.
"We believe the North Sea has a huge future, but there is much work still to be done to secure this value and cement its position as a global oil and gas hub,” said Kevin Reynard, PwC's office senior partner in Aberdeen.
"It's vital that we take a more strategic and integrated view to help extend the life of the North Sea – for everyone involved and for future generations. If we choose not to change, then we risk sleep-walking into an early sunset."
In the report, PwC proposes companies operating in the North Sea should work together and collaborate, which would enable them to plan and work more efficiently.
PwC estimates supply chain costs could be reduced by up to 10 per cent, boosting profitability by as much as £3bn, according to the report.
The company also urged the industry to grasp the "rich source of opportunity" that decommissioning offers, saying this could be worth about £35bn.
In support of the earlier call of Sir Ian Wood for a new strategic framework overseen by a newly created independent regulator, the report said the UK government needs to provide "strategic clarity" on taxation, with PwC's latest Northern Lights report warning a "lack of fiscal stability" risks damaging business.
"There is still a proliferation of new tax costs, several of which have arisen unexpectedly. We believe that government urgently needs to provide strategic clarity in this area so the industry can plan ahead. A lack of fiscal stability at this defining moment in the UK North Sea life has the potential to seriously damage business prospects within the sector," the report stated.