Scottish Energy Minister Fergus Ewing has unveiled a report urging for reform of the North Sea Oil and Gas taxation regime.

The report proposes fiscal changes to support investment and encourage exploration.

The proposals include an investment allowance to offer support for fields that have higher development costs.

"Exploration rates in the North Sea are at historically low levels. If action is not taken, this will reduce the number of new discoveries, and in turn, future production."

It also includes a phased and timetabled reversal of the increase in the supplementary charge implemented by the UK Government in 2011.

The government said an exploration tax credit will help increase levels of exploration and sustain production in the future.

Ewing said: "Exploration rates in the North Sea are at historically low levels. If action is not taken, this will reduce the number of new discoveries, and in turn, future production.

"While this is not simply a fiscal issue, urgent fiscal stimulus is required to improve the exploration outlook.

Oil and Gas UK reported that around 25% of exploration wells were drilled by small to medium-sized firms in 2013.

Ewing said: "The tax arrangements currently in place do not provide support to new entrants, or smaller companies, who generally do not have sufficient taxable profits against which to offset their exploration expenditure and in many cases can face constraints in their access to finance."

Oil and Gas UK chief executive Malcolm Webb said: "Sharply falling oil prices are now adding to the significant challenges the UK offshore oil and gas industry was already facing.

"The current tax regime is one such challenge and a key factor for companies making decisions on investment and activity. All helpful insights on that issue are welcome, so we will certainly respond to the Scottish Government’s request for views and information."