Trade body Oil and Gas UK said that the industry was "re-inventing" itself in difficult market conditions by offering increased efficiency, fiscal competitiveness and a world class supply chain.
UK oil and gas still supports around 300,000 UK jobs, but the North Sea is in urgent need of fresh capital investment, according to the trade body's annual economic report. It called on the government to commit to plans to encourage investment in the sector, including plans to allow purchasers to benefit from the 'transferable tax history' of late-life assets.
The government is due to report back on potential changes to the tax treatment of late-life oil and gas assets alongside the Budget this autumn.
Separately, the government has called on the UK industry to "pioneer" large scale decommissioning of old oil and gas rigs and pipelines. As a mature basin, the North Sea will be one of the first regions in the world to start a large scale decommissioning programme, giving the sector the opportunity to develop expertise in this area and "sell it to the world".
"The UK oil and gas industry supports 300,000 jobs, and with up to 20 billion barrels of oil yet to recover, has many productive years ahead," said treasury secretary Andrew Jones, speaking at this week's Offshore Europe conference in Aberdeen.
"As the need for decommissioning grows, we must seize the opportunity to cement the UK as a world leader in this field and export this knowledge globally. Efficient decommissioning means big changes to the oil and gas industry – requiring new technology, skills and innovative approaches. This will ensure that decommissioning is safe and cost effective while also protecting the environment," he said.
UK oil and gas operators are currently predicted to spend £60 billion on decommissioning between now and the 2050s, with more than 100 platforms needing to be scrapped and over 1,800 oil wells plugged this year alone. Tax relief on decommissioning covers around 40% of the cost for companies, or a predicted £24bn between now and the 2050s.
The Oil and Gas Authority (OGA), which is the oil and gas industry regulator, has set itself a target of reducing the total cost of decommissioning to less than £39bn, something which will require significant efficiency gains and technological advances. However, Jones said that the oil and gas industry had always been at the forefront of innovation and productivity gains, pointing out that operating costs have "almost halved" in the last couple of years, from around $30 a barrel to around $15.
North Sea oil and gas production has increased by 16% since 2014, driven by production efficiency improvements, brownfield investment and new field start-ups, according to the Oil and Gas UK report. However, chief executive Deirdre Michie said that there were "serious concerns" about low levels of exploration and appraisal activity, with only three new fields approved by the government since the start of 2016.
"There are still serious issues facing our industry, which has suffered heavy job losses since the oil price slump," she said. "But we are hopeful that the tide is turning and expect employment levels to stabilise if activity picks up."
"Our sector is successfully re-positioning through efficiency and cost improvements. We are transforming in a way that is getting UK oil and gas back in the game. We are increasingly being seen as a much more attractive basin in which to invest, with further M&A activity expected over the remainder of this year and into the next - [but] we still need further investment to generate new activity and sustain hundreds of thousands of UK jobs," she said.