The decline of Britain’s oil and gas output will accelerate unless the government makes deep cuts in the rate of tax on new investment in the North Sea, the industry association has warned.

Oil & Gas UK, which represents North Sea producers and suppliers, said the number of exploration and appraisal wells drilled to find new resources had slumped in the first half of the year to 29, less than half the 61 drilled in the first half of 2008.