THE oil and gas industry has admitted it is facing "challenging times" as a new report warned whole areas of the North Sea oil infrastructure are at increased risk of being closed

Falling oil prices has produced an 'increased risk' of the premature decommissioning of critical infrastructure with the potential to shut down whole areas of the continental shelf, according to the regulator, the Oil and Gas Authority.

It come seven months after the body reported its "bleakest" annual performance since the 1970s and warned urgent action was needed to address a recent downturn.

New data also shows the number of new exploration and appraisal wells have been cut in half since 2010, and is at an all time low.

The authority said that "revitalising exploration continues to be a priority" after the number of exploration wells dropped from 31 over a six month period in 2010 to 16 in 2015

It is now moving ahead with a £20 million programme of seismic surveys in the UK continental shelf aimed at encouraging North Sea drilling.

Operations began in mid-July with three vessels acquiring data over an area roughly the size of the UK land mass.

Oil & Gas UK the representative body of the energy industry said change was needed to adapt to an era of lower oil prices.

Brent North Sea oil was trading last week at $43 a barrel, almost 60 per cent lower than during the same period last year. The value has decline through a mixture of rising production in places such as the US and Iraq, coupled with plunging demand due to a flatlining world economy.

Oil and Gas UK has estimated that around 20 percent of UK production is uneconomic at a $50-per-barrel oil price.

An Oil and Gas Authority spokesman said: "We should be in no doubt about the scale of the challenge ahead but it is important that we recognise the progress that has been made over the past six months and remain focused on the things that matter most as we look forward.

"Irrespective of the oil price, the UK offshore oil and gas industry needs to change. While the headwinds are strong, the expertise, imagination and tenacity of our industry and the people it employs are more than capable of rising to this challenge.

"The OGA is urgently working with industry and government as a catalyst for this change and now is the time for everyone to demonstrate leadership."

Deirdre Michie, chief executive of Oil and Gas UK said: “The industry is facing challenging times and the OGA’s drive towards co-operation between companies, improved stewardship of Britain’s oil and gas reserves and faster licensing process will help deliver the transformational change that is required to create a sustainable business in a world of lower oil prices.

“The sector has made a great economic contribution – having delivered production of 43 billion barrels of oil equivalent (boe), paid over £330 billion in tax to date and supported hundreds of thousands of skilled jobs – and huge potential remains with over 20 billion boe remaining to be extracted.

“Alongside Treasury’s work to restructure the tax regime and the industry’s focus on increasing efficiency and reducing costs, the OGA’s work is crucial to the success of tri-partite approach to maximising recovery of the UK’s oil and gas and we welcome the opportunity to work with OGA to help shape the industry’s future.”

The Oil and Gas Authority said in a report: "The further decline in global oil prices in recent months has increased the risk of this domino effect," it said in a report on its first six months.

It said a significant fall in production efficiency and sharply rising costs have let the UK oil and gas sector "particularly exposed" to the drop in oil price."

Last month Total, one of the biggest energy firms operating in the North Sea, sold off £585m of its UK gas interests. Maersk Oil plans to shut the Janice field and cut 200 jobs.