An ambitious plan to shore up investment in Britain’s struggling North Sea oil industry and transform it into a renewable energy hub for the future was unveiled today by the Chancellor.

The budget announcement contained a package of measures designed to ensure that an additional 2 billion barrels of oil are extracted from smaller oil and gas fields that are currently only marginally economic because of weak oil prices.

The measures include tax exemptions that will mean North Sea operators developing fields of a certain size pay only the basic rate of corporation tax of 30 per cent on income rather than the supplementary rate of 50 per cent currently charged on most fields.

Another measure will allow oil companies to swap mature oil fields without incurring capital gains tax - a step that will accelerate the trade in partly depleted fields, which has slowed sharply in recent months.

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“There is, at the moment, less incentive to explore and extract oil from the North Sea,” said Alistair Darling.

“So I am bringing forward incentives to encourage smaller fields to be brought into production.”

Derek Leith, head of Ernst & Young’s oil and gas business, said the measures were welcome and would help encourage fresh investment in the industry, which is suffering a steep drop in investment because of the credit crunch and the fall in global oil prices.

But the Chancellor also unveiled plans to transform the North Sea into a clean “energy hub for the future” with £525 million of support for offshore wind energy projects over the next two years.

He said the development of the North Sea oil industry had made Britain a world leader in offshore oil and gas and stressed that he was “determined that we will replicate this success in renewable energy”.

He also said that the European Investment Bank would supply an extra £4 billion of extra funding for offshore wind projects around the UK.

And in a push to tackle the emissions from coal and gas fired plants, the Chancellor said a new funding “mechanism” would pay for between two and four projects which test the use of technology which captures and stores carbon underground.

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