Nicola Sturgeon will today call on the UK Government to consult urgently on incentives to boost exploration in the North Sea.
The First Minister will make the demand at the annual Oil and Gas UK Conference in Aberdeen.
Figures show that North Sea exploration last year reached its lowest level in at least two decades, with 14 explorations wells drilled compared to 44 in 2008.
The Scottish Government claims the Westminster Government has yet to deliver any follow up action after committing at the end of 2014 to further work on options for supporting exploration through the tax system.
The First Minister will today suggest that financial incentives, such as a new exploration tax credit or an expansion of the investment allowance, will help companies to find new oil.
She will also point to the example of the Johan Sverdrup field in Norwegian waters, which was discovered in 2010 in a mature area which had previously been explored without success.
Speaking ahead of conference, Ms Sturgeon said: “North Sea exploration needs urgent support. You only need to look to Norway to see the impact that effective stewardship and the right policies can have on exploration, where more than 40 exploration wells were drilled in 2014.
“The benefits from exploration not only boost future production but will also be felt across the supply chain and the wider economy. For example, just this week Statoil announced two new contracts for the Johan Sverdrup field, which are worth billions of pounds.
“The field is estimated to hold approximately two billion barrels of oil – in contrast, this is 40 times more than the 50 million barrels of commercial reserves discovered in the UK Continental Shelf in 2014.
“The establishment of the Oil and Gas Authority has been an important development, which will help address some of the challenges. However, it is essential that the tax system is also appropriate given the issues faced by industry.”
She went on: “The Scottish Government believes it is important that we have stronger fiscal incentives to support exploration. This could include the implementation of a new exploration tax credit, or by expanding the scope of the investment allowance.
“The critical issue is that the UK Government needs to deliver on its commitment to consult on incentives to boost exploration in the North Sea, and this consultation must be launched urgently – so that firm proposals can be announced in the Autumn Statement.”
A spokeswoman for the Treasury said: “The UK’s oil and gas industry supports hundreds of thousands of jobs, most of them in Scotland, and we want to make sure it’s in the best possible position to manage the current decline in investment. We can’t control the oil price – but we’ve delivered on the Wood Review recommendations and established the Oil and Gas Authority.
“In addition, the package of support announced in the Budget in March is expected to encourage over £4 billion of additional investment in the UK’s oil and gas industry over the next five years.
“We look forward to the industry capitalising on this, to deliver efficiencies and make the industry more robust now and for the future.”
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