RADICAL fiscal and regulatory changes are needed in the oil and gas industry to make sure the remaining resources in the North Sea provide the greatest economic benefits, an expert group has warned.

The Independent Expert Commission on Oil and Gas has called for "fundamental change" to encourage more investment and production because the industry has reached a ­"critical crossroads".

The commission was set up by the Scottish Government, and tasked with exploring how the total value of the whole industry can be maximised, and how the future for the UK continental shelf (UKCS) can be secured, ahead of the independence referendum.

It has called for a change in "stewardship philosophy" by overhauling the tax and regulatory regimes which are currently in place.

The Government should adopt a stable, predictable and internationally competitive tax regime, it states.

"Lower tax rates with modified allowances could incentivise new developments whilst producing a simpler system."

Chairman Melfort ­Campbell said: "Within the current regime and climate of declining investment, we are seeing inadequate returns for operators, reduced income for the Treasury and the loss of the added value through the supply chain and into the wider economy.

"The commission concludes that Government must recognise policy must change from seeking to control access to a sought-after resource to one where investment has to be attracted by positive features.

"In other words, the UKCS used to be like a nightclub with bouncers on the door only allowing celebrity VIPs access. Now, it is more akin to a trattoria with waiters touting for business on the pavement outside."