THE head of the new oil and gas regulator has said it will revamp the North Sea exploration licence system to try to boost flagging activity levels amid the crude price plunge.

Andy Samuel, chief executive of the Oil and Gas Authority, said the organisation will shortly be announcing a new regime, which will address industry concerns about the existing system.

"It's more flexible on terms, it gives industry what they wanted and fixes a couple of issues," Mr Samuel told the Reuters agency.

The new regime will give firms more freedom to plan work to suit the areas they are working in.

The OGA hopes that by encouraging firms to bid for licences it can help to reverse the dramatic drop in exploration activity seen in the North Sea.

Drilling has fallen to around a quarter of the level seen at the turn of the century.

The high cost of operating in the area has been seen as a deterrent for some time. The fall in the crude price has made some firms increasingly reluctant to commit to exploration activity with uncertain payback prospects as they try to cut costs and conserve cash.