THE North Sea is poised to unlock £5 billion of investment – but more exploration is needed, according to trade body Oil and Gas UK.

Chief executive Deirdre Michie today insisted the outlook for the upcoming 12 months is the “healthiest” in five years, but warned change must be made to sustain production into the 2020s.

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Calling for further exploration to uncover currently undetected reserves, the organisation released a new report today as workers in Aberdeen prepare for 250 lay-offs announced as a result of Total’s £5.8 billion acquisition of Maersk Oil.

The paper states that as many as 16 gas and oil developments may get the green light this year – more than were approved in the last three years combined and enough to bring in billions of pounds worth of investment.

It is understood that the fields could yield more than 450 million barrels, but Oil and Gas UK says this is less than is needed to sustain long-term production at current levels.

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Development drilling has fallen by 45 per cent over two years, prompting “serious concern”.

Michie said: “Many areas of the supply chain are still struggling with the impact of the downturn and have yet to benefit from any upturn in activity.

“It’s vital that we keep driving fresh thinking, innovative approaches and efficiency efforts. The short-term outlook for our sector is more positive with new projects and new entrants bringing new life to the basin, but there are undoubtedly longer-term challenges.

“We need more exploration if we are to get close to recovering the three to up to nine billion barrels of yet-to-find hydrocarbons on the UK continental shelf (UKCS), matched by a continuing focus on improving recovery from existing fields.

“The investment decisions we make today are key to how much we produce in the years to come.”

According to the report, a five per cent push this year will make production 20 per cent higher than it was five years ago. Meanwhile, unit operating costs have been slashed in half since 2014 and post-tax cash flow could hit a seven-year high.

Michie said: “Our sector is leaner, more efficient and more optimistic than it has been in recent years and 2018 looks set to be a better year.

“What we have learned in our response to the downturn has made us better equipped to tackle the ongoing challenge of maximising production for the longer term and boosting profitability in the supply chain but without increasing overall project costs or damaging competitiveness. Our remarkable resilience owes a great deal to the ingenuity and innovation of our people.

“More projects are taking place and investment is happening because of the sweeping changes made to adapt to the challenging business climate. This has helped make the UKCS one of the most attractive mature basins in the world in which to do business and we will continue to work hard to maintain our competitive advantage.”

More than 300,000 people work in and support the sector throughout the UK, down from a high of 463,900 following years of contraction. As many as 56 per cent of companies surveyed for the report expect headcounts to rise over 2018, but six per cent say theirs will fall.

A consultation on losses of both employees and contractors is underway at Total, which is now the second largest operator in the North Sea.

Yesterday a spokesperson for the French energy giant said: “Every effort will be made to minimise redundancies and to find alternative posts in other parts of Total’s global business for those staff in Aberdeen whose positions may close.”