Investment in the UK’s embattled oil and gas industry is expected to fall by almost 90pc this year, raising urgent industry calls for the Government to reform its North Sea tax regime to safeguard the industry’s future.

Oil firms have been forced to dramatically slash costs in order to survive a 70pc cut in oil prices since mid-2014, but the severe drop in investment threatens thousands of North Sea jobs, said Oil and Gas UK (OGUK).

The trade group says that firms have forced down the cost of oil production from $29.30 a barrel in 2014 to just under $21 a barrel in 2015. But despite improving efficiency and cutting operating costs almost half of the UK’s oilfields will struggle to make a profit if oil prices remain at $30-a-barrel levels for the rest of the year.

The financial risk means many have axed or delayed investment decisions, and OGUK said that investment in new projects could fall as low as £1bn this year, compared with a typical average of £8bn a year.