OIL and gas firms have slashed the amount they plan to spend on developing UK North Sea assets by $18bn (£13bn), around 25 per cent, since the crude price started plunging in 2014, experts have estimated.

The analysis by the Wood Mackenzie consultancy provides further evidence of the scale of the downturn in the North Sea where firms have shelved plans to develop a range of fields in recent months.

Edinburgh-based Wood Mackenzie reckons spending on new production facilities and the like will total $50 billion in the five years to 2020.

That compares with an estimate of $68bn made by the firm in 2014, before the long boom in oil and gas markets ended as growth in production in areas such as US shale fields raced ahead of demand.

The figures underline the scale of the damage being caused to the oil and gas supply chain as projects are axed. They reflect the fall in the price of services which has been recorded amid intense competition for the remaining business.

Oil & Gas UK last week forecast the number of jobs shed by the industry amid the oil price slump will rise to 120,000 by the end of the year.

The cuts in spending will mean that production in the UK is much lower than would have been expected and heighten concerns that billions of barrels reserves could be left undeveloped.

Wood Mackenzie expects seven billion barrels of oil equivalent less to be produced globally from 2016-2020 than was expected before the oil price drop.

It reckons that oil and gas companies have cut their planned spending on exploration and development for 2015-2020 by $1 trillion in total since 2014.

"The impact of falling oil prices on global upstream development spend has been enormous,” said Malcolm Dickson, principal analyst at Wood Mackenzie.

Total projected development spending has been cut by 22 per cent, $740bn, globally since 2014.

While the UK North Sea has been hit hard by the downturn Wood Mackenzie’s research suggests other areas have fared worse.

It reckons total capital investment for the US excluding Alaska and Hawaii for 2016-17 has been cut by around 50 per cent, or $125bn.

Global exploration investment has more than halved since 2014.

Mr Dickson noted: “Kick-starting the next investment cycle will require more cost deflation and project scope optimisation along with confidence in higher prices and arguably fiscal incentives.”