The UK government is preparing contingency plans to guard against a North Sea bankruptcy crisis as the plight of troubled North Sea operator Enquest raises concerns over a key North Sea project.

According to city sources the Oil and Gas Authority (OGA) is mulling action to tackle the risk of insolvencies among struggling mid-cap players Enquest and Premier Oil which are wracked with debt following the oil market rout and now stand at the mercy of their lenders.

The OGA was formed to safeguard a long-term future for the North Sea but has since had to form a ‘low oil price contingency team’ to understand the pressing issues facing companies and what can be done to avert a raft of insolvencies which would prove calamitous for the industry and taxpayers.