Untapped North Sea oil reserves far exceed industry estimates at around 30 billion barrels of oil, according to geological experts.

Since the discovery of oil in the North Sea, the equivalent of 37 billion barrels of oil have been extracted from the UK Continental Shelf (UKCS), leaving up to 25.5bn barrels still to be recovered.

However, industry experts believe that the remaining reserves exceed current estimates by as much as a fifth.

According to BBC reports, new technology and the rising price of oil mean it is economically viable to drill fields that were once considered too difficult or remote.

The suggestion that the North Sea could harbour more oil than was previously anticipated will cheer the Government which last week made a surprise change to North Sea taxes, designed to increase falling investment levels in the UK Continental Shelf.

Mike Tholen, Oil & Gas UK’s economics director, the industry body, told Times Online: “Oil & Gas UK currently estimates that up to 26 billion barrels of oil and gas remain to be recovered from the North Sea but none of these volumes will be easy to recover. Securing investment to develop and extract them relies on international investors perceiving the UK as a competitive place to do business."

He added that the industry remained committed to continuing discussions with the Government to find ways to boost investment, so that the North Sea oil and gas reserves can be maximised.

Oil and gas output from the North Sea has been falling by about 3% a year since 2006 to 2.8 million barrels per day (bpd) last year.

Britain's hydrocarbon output has been in rapid decline since 2001 when it reached 4.2million bpd, and the industry has had its wings clipped twice by tax increases introduced by Mr Brown in his previous role as Chancellor.

Despite the rising price of oil, the North Sea must still compete for investment with many other cheaper locations in the world. According to Oil & Gas UK, total costs - covering finding, development and operations - last year averaged $35 per barrel, making the North Sea one of the most expensive oil and gas provinces in the world.

Investment in the UKCS dropped by about £1bn in real terms to £4.9bn last year. There are enough opportunities to sustain investment at present rates beyond 2010, provided they can be commercialised.

The latest industry activity survey shows total capital investment of £29bn over the next 10 years, of which £12bn will be in existing projects and £17bn in projects that have yet to be approved.

These £17bn of investments are expected to develop 2.7bn barrels, whereas a year earlier £12.5bn of capital investment was targeted at developing 2.2bn barrels.

Without the present rate of investment, Oil & Gas UK estimates production would decline at between 15 to 20 per cent a year.

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