THE new chief executive of Oil & Gas UK, Deirdre Michie, has said more job losses are likely in the North Sea and raised the prospect of a permanent fall in the numbers employed in the industry.

Noting oil and gas firms have cut around 5,000 posts and slashed the pay of many workers since the crude price plunged, Ms Michie said the painful process of attrition will continue in coming months.

"There is probably more to come in that space. Some companies will be very challenged through this time," said Ms Michie, who took charge of the trade body earlier this month.

Ms Michie highlighted the scale of the challenge facing the North Sea industry following the fall in the oil price from $115 per barrel in June to around $45 in January. While crude has rallied to around $65 since then the pressure is still on.

Ms Michie observed: "At $110 per barrel the industry was facing problems in terms of cost efficiency, at $60 oil it's a huge issue with many fields not producing enough cash to cover their operating costs."

Noting that some firms have been slower to react to the price fall than others, she added: "Some of the stories will be tough and they will be difficult."

Ms Michie did not give an estimate of the scale of likely job losses.

Asked if workforce numbers would recover to the levels seen before the oil price fell, she told reporters: "I think a more focused work force is probably the right terminology. The industry is going through a change; it does need to get leaner as it goes forward. That's what we are witnessing today."

However, Ms Michie warned any attempt by trades union members to use industrial action to block the change process would backfire.

"From our point of view there will be no winners if we move to industrial action and it's something we must avoid where we can," she said.

Ms Michie, who held senior positions at Shell's North Sea business before joining Oil & Gas UK, said collaboration between firms will be vital if the industry is to meet the challenge posed by the oil price fall.

She noted that with billions of barrels oil still to be recovered from the North Sea there is plenty to go for. However, the UK industry must reduce production costs from $30 per barrel to $20/bbl by 2020 to put it on a sustainable footing.

While Oil & Gas UK welcomed the changes made to the tax regime in the last Budget of the coalition Government in March it will press for further reforms.

Noting that the 60 per cent plus average headline rate of tax paid by oil and gas firms is much higher than the standard of about 20 per cent in other industries, Ms Michie said the new UK Government should provide further help in The Budget set for July. This should include measures to encourage spending on new assets and to ease the tax burden on infrastructure.

The industry and Government need to think how the tax regime could be amended to encourage exploration.

Following calls for the UK to introduce a system like that in Norway, where firms can recover 78 per cent of exploration costs, Ms Michie noted: "My understanding is that it's not something that would fit naturally with the fiscal regime that we have ... it's not a straight cut and paste."