A new report by Oil & Gas UK has estimated that investment in new North Sea oil and gas projects will decline by a third in 2015 due to an increase in costs and fall in prices.
Capital investment on new fields is expected to decline to between £9.5bn and £11.3bn in 2015, from £14.8bn in 2014.
Annual investment in approved projects alone is estimated to decline rapidly and could fall to £2.5bn by 2018.
The survey reports that 6.3 billion barrels of oil equivalent (boe) are approved or under development and there are another 3.7 billion boe of potential investment opportunities.
However, companies indicated at the end of 2014 that less than 2 billion boe of those were likely to be developed.
Even though drilling of 25 wells was anticipated in 2014, only 14 took place, continuing a downward trend.
Oil & Gas UK said the bleak picture emphasised the need of government action to secure the industry’s long-term future.
Oil & Gas UK chief executive Malcolm Webb said: "Without sustained investment in new and existing fields, critical infrastructure will disappear, taking with it important North Sea hubs, effectively sterilising areas of the basin and leaving oil and gas in the ground."
"Even at $110 per barrel, the ability of the industry to realise the full potential of the UK’s oil and gas resource was hamstrung by escalating costs, an unsustainably heavy tax burden and inappropriate regulation. At current oil prices, we now see the consequences only too clearly."
Oil & Gas UK said one positive finding of this year’s survey is that output in 2014 had its best year-on-year performance since 2000, dropping just 1% since 2013 to 1.42 million boe per day.