Investment in British North Sea projects is expected to fall below £8 billion in 2016 from £14.8 billion last year, and could shrink further due to a rise in costs and fall in prices, industry lobby group Oil & Gas UK said in an annual survey yesterday.

Falling investment means much of Britain’s remaining oil reserves will not be extracted, said Malcolm Webb, chief executive of Oil & Gas UK, casting doubt on a North Sea revival which the government hopes will help fill its coffers.

Global oil companies including North Sea investors Shell and BP, have announced billions of dollars in capital expenditure costs following a sharp fall in oil prices since June.

The industry has repeatedly called for cuts to North Sea taxes to help tackle costs which have risen to a record high £18.50 per barrel of oil equivalent.

Britain’s finance minister has promised to reduce taxes and details are expected in next month’s budget announcement.