Some £3bn of investment in offshore oil and gas was deferred in 2020 and 2021 prompting a demand for government support by the industry’s trade association.
Oil and Gas UK (OGUK) said lack of funds threatened the UK’s energy transition and hindered the country’s ability to reach a net-zero future.
OGUK added that its 2021 Business Outlook showed that the industry was facing extreme uncertainty due to the economic effects of the pandemic resulting in a significant decline in offshore activity levels.
Overall levels of expenditure have fallen by more than a quarter in the last year alone.
However, production from UK waters had met some 70% of the country’s oil and gas needs during 2020 and new investors continue to be attracted to the remaining potential of the North Sea.
OGUK chief executive Deirdre Michie said that the lingering effects of Covid-19 had undermined energy communities, causing a rise in unemployment and a slump in activity.
“A climate-friendly future needs significant investment in indigenous opportunities so companies right across the sector can continue to develop low-carbon solutions.
“That is why we are working with the Government to deliver a transformational North Sea Transition deal, which will drive forward carbon capture and storage, hydrogen and low-carbon projects across the UK.
“This is an industry which continues to play a critical role in the economy, supporting hundreds of thousands of jobs in industrial heartlands across the nation, generating affordable energy for millions and providing billions in value to the economy.
“But we cannot continue on this trajectory without vital support. Companies are in a fragile state.
“We need the recognition that our industry is a key player in a successful energy transition – one which won’t be possible without the inclusion of our sector.”