THE latest North Sea Business Outlook report from Oil & Gas UK adds to the evidence that a recovery is under way in the area after three grim years.

Whether it will be strong enough to bring much relief for hard-pressed firms in the supply chain or help ensure the UK maximises the recovery of its oil and gas reserves is a different matter.

Oil & Gas UK found up to 16 North Sea projects worth a total £5bn could win approval this year indicating firms are more likely to invest in the area than they have been since a long boom in the industry ended in 2014.

It reckons total spending in the area could increase slightly in 2018 following three years of cuts. Some 56 per cent of firms told Oil & Gas UK they planned to increase headcount this year.

All that points to a big improvement in sentiment in an area where people have got used to hearing talk of cuts in spending and jobs.

But the lead author of the report, Adam Davey, said it was too soon to be sure the recovery signalled by the findings will be maintained.

He noted crude prices could slip back into reverse amid growing output in the US and concern Opec production discipline may weaken.

With current spending still running at around half the levels seen in 2013, it would take an incredible increase in activity for the industry to get back to where it was then.

The report makes clear the pressures on the supply chain remain intense.

There is no sign the partial recovery in the crude price since late 2016 has been enough to result in a recovery in exploration drilling, which fell to a record low last year.