LONDON (Reuters) - Investment in British North Sea projects is expected to fall below 8 billion pounds ($12.35 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 on Tuesday.
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.
"Without sustained investment in new and existing fields, critical infrastructure will disappear, taking with it important North Sea hubs, effectively sterilising areas of the basin and leaving oil and gas in the ground," Webb said.
Global oil companies including North Sea investors Shell (L:RDSa) and BP (L: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 pounds per barrel of oil equivalent.
Britain's finance minister has promised to reduce taxes and details are expected in next month's budget announcement.
"We're now looking at what more we can do to work with industry to support investment in this important sector," George Osborne said in a statement on Tuesday.
($1 = 0.6478 pounds)