North Sea oil and gas sheds 5 000 jobs in a year

UK oil production has fallen to its lowest level since output started in the mid-1970s, as old fields run out of resources and operators have begun to announce their intention to decommission unprofitable fields early.

North Sea operators face some of the industry's highest operating costs due to the maturity of the basin, meaning these companies have been particularly hard hit by the near 55 per cent decline in Brent crude prices since June 2014.

"Regrettably, this has led to the loss of around 5,500 jobs since late 2014," Andy Samuel, chief executive of the OGA, said in a report summarising the newly-created body's first months.

The OGA was established as an executive body five months ago to help North Sea operators squeeze as much oil and gas out of the basin as possible, but with North Sea operators including Shell, BP, Chevron and ConocoPhillips all announcing staff cuts this is becoming increasingly difficult.

Despite falling revenue the UK's oil and gas sector is still an important source of tax revenue and employs roughly 375,000 people, but the scale of the job losses is beginning to raise concerns of a skill gap emerging in the future.

The OGA said it had helped mediate commercial discussions between companies involved in the running of Theddlethorpe gas terminal and the Sullom Voe terminal on the Shetland Islands, key facilities in the North Sea but which are expensive to operate.

"We should be in no doubt about the scale of the challenge ahead," Samuel said.