THE equivalent of up to four billion extra barrels of oil worth £200 billion to the British economy can be squeezed out of its oil fields over the next 20 years, according to a new report.

But the review of the industry by retired Scottish oil magnate Sir Ian Wood, the former chairman of the Wood Group, warned there will have to be a "step change" to make the most of the remaining oil and gas resources.

In his findings published yesterday, Sir Ian said this should include a new regulator to streamline the offshore industry and unprecedented co-operation in the sector. The study comes five months after the former business-man was asked by the UK Government to develop a strategy to maximise the economic benefit from oil and gas.

The success of the sector is crucial to the UK. In 2012-13, the industry paid £6.5 billion in corporate taxes on production, more than 15% of all corporate taxes in the UK. In addition, it supports the employment of 450,000 people across the UK.

But over the last three years production has fallen by 38%. Sir Ian's report - referring to a unit of energy used by firms to combine the figures for oil and gas reserves - says: "The decline in exploration led to less than 50 million boe (barrels of oil equivalent) being discovered in 2012. If such a trend continues the UK will fail to recover even a small portion of the exploration potential that still remains across the United Kingdom Continental Shelf which Department of Energy and Climate Change estimate to range from six to 16 billion boe."

Sir Ian interviewed 40 firms in the oil and gas industry represen-ting more than 95% of UK produc-tion, as well as key government figures, and regulators from neighbouring regimes such as Norway and the Netherlands.

He said: "The evidence is clear. We need to strengthen the capacity and capability of our stewardship regime to enhance collaboration significantly across the North Sea if we are to meet the challenging demands of maturity and diversity and maximise the economic benefits for both the country and the industry."

He is calling on the DECC to establish a new arm's length regulatory body with new powers to take on the stewardship role for the next phase of the UKCS. It would be funded by the industry and work closely with industry on strategies for exploration, production efficiency and decommissioning.

The organisation would also have powers to achieve greater co-ordination of activities and collaboration, including the right to attend operator consortia management meetings.

He said: "I believe it is now time for a step change in North Sea stewardship and collaboration. We need to be prepared for the challenges of this next phase in the UKCS' life. A better resourced arm's length regulator with a strong economic focus, capable of attracting top quality personnel with appropriate industry experience, will be able to work more closely with the industry and facilitate the development and progress we need. This will require fundamental changes in operator behaviour but they are clearly up for it".

The report had been commiss-ioned by UK Energy Secretary Ed Davey, who said that Sir Ian had given "government and industry alike plenty to think about".

Malcolm Webb, chief executive of Oil & Gas UK said he looked forward to Sir Ian's final report in the New Year, but there was no time for delay. "To maintain high investment in this basin and prevent premature decommiss-ioning of infrastructure, the Government needs to move swiftly ahead with these proposals."

WWF Scotland director Lang Banks said: "There is something deeply worrying about publishing a report that aims to squeeze even more oil and gas out from beneath the North Sea just as delegates gather for UN talks to discuss ways to tackle climate change by reducing our dependency on fossil fuels."