GEORGE Osborne must do more to boost exploration activity in the North Sea in this week's Budget to help boost ailing confidence in the oil and gas sector, Aberdeen and Grampian Chamber of Commerce has said.

The chamber said members broadly welcomed measures to help the industry included in the March Budget, such as cuts in tax rates. However, it said the Chancellor must include some more tangible incentives to encourage exploration in UK waters to help lift drilling activity from the current depressed levels.

The chamber's latest Oil & Gas survey released last month found the slump in the crude price since June last year had negatively impacted 91 per cent of the businesses surveyed.

Some 70 per cent of services firms reported a drop in the value of exploration activity. This must be increased to ensure new fields can be developed to help replace the output of those that run dry.

The chamber's research indicates the fall in the oil price is encouraging firms to decommission fields that they are struggling to make money from.

Research and policy director at the chamber James Bream said: "Government support is especially important in the short to medium term for the industry, as the fall in oil price has forced energy sector companies to lay off staff, cancel projects and reduce prices, which impacts the whole North-east region."