SCOTLAND’S oil and gas industry may have as little as two years to fix fundamental problems before sliding into “a rapid and premature decline”, according to a new report.

The analysis by PwC said the North Sea, which supports 350,000 jobs across the UK, had the potential to carry on for decades, with as much as 30 billion barrels of oil still remaining.

But in a stark warning, it also said the industry had “reached a fork in the road” and “the window of opportunity to effect change is getting smaller all the time”.

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The two-year timeframe coincides with Theresa May’s Brexit negotiations and hence the timetable for a second independence referendum if the terms of Brexit fail to satisfy First Minister Nicola Sturgeon.

The North Sea loomed large in the 2014 referendum, with the SNP’s white paper predicting tax receipts of up to £7.9 billion this year – the price collapse means they are effectively now zero.

Further uncertainty over the future of the industry could also feature in a second referendum. Besides the recent collapse in the oil prices and associated job losses, the report pointed to a lack of leadership, fragmented infrastructure and endemic cost inefficiencies.

As companies send their best staff to frontier operations, the mature North Sea is suffering from a talent drain, resulting in a lack of innovation.

Some operators are also struggling to access funds, as lenders are spooked by insolvencies. The global shift from fossil fuels to a low carbon future meant added problems, though the North Sea could yet help “bridge the gap”, particularly with gas supplies, if it acted fast.

Based on face-to-face interviews with almost 40 industry executives, the report said urgent “transformative changes” were required, concluding: “The general consensus is the North Sea does have a future. However a number of fundamental issues will need to be addressed in the next 24 months if [it] is to avoid a rapid and premature decline.”

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There are about 300 platforms in the North Sea, with 75 firms operating under 1,500 licences. The report, called A Sea Change, said previous high oil prices had masked a series of problems, such as “unrealistic salary expectations” and cost inefficiencies, and the slump had now exposed them. “There is a sense of urgency in the industry, a feeling the sector really has only one more cycle left and one last wave of success. The clock is ticking as to when these changes need to be implemented before we see the North Sea decline at a far greater rate of knots than it should. If managed correctly, the North Sea can still provide a few more decades of production.”

It said there was a need for a “North Sea champion” to lead innovation, greater collaboration between smaller operators, and a major role for the UK Government in decommissioning.

Alison Baker, Oil and Gas leader at PwC for the UK, Europe, Middle East and Africa, said: “As oil prices begin to recover, there is a sense we are finally seeing light at the end of a very dark and long tunnel. There may be a temptation to see a price recovery as the panacea to all ills. “The reality is the North Sea still has to address a number of fundamental challenges.”

Labour’s Jackie Baillie said: “SNP ministers ignored the crisis in the oil and gas industry for months because it was politically embarrassing for them. The Scottish Government should commission an urgent review of the measures to protect jobs and skills.”

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Industry body Oil and Gas UK said it did not recognise the two-year window, but did accept many of the problems and the need for urgent action.

Chief executive Deirdre Michie said: “Despite facing unprecedented challenges over the past few years the UK oil & and gas industry has demonstrated drive and determination.

“The most important issues facing our sector are the lack of exploration and development activity and a drought of new investment. I have already written to the Chancellor ahead of his Autumn Statement to help encourage new entrants into the market. In addition, we need certainty in our fiscal regime.

A Scottish Government spokesman said: “While it remains a challenging time for the oil industry, significant opportunities remain in the North Sea.

“However, measures are urgently needed to give operators the confidence to continue investing, particularly in stimulating exploration to secure future production. The UK Government, who retain control of the main economic and tax levers, must consider further measures... in the Chancellor’s forthcoming Autumn Statement.”