Oil & Gas UK's Economic Report 2016 found improved competitiveness in the industry as the cost of extracting a barrel of oil or gas from the UK Continental Shelf (UKCS) has nearly halved.
The report said efficiency savings led to a 45% drop in extraction costs from 2014 and production rose 10.4% in 2015, its first increase in 15 years.
However, the industry still faces challenges as exploration has fallen to record lows and new investment is scarce.
Industry experts are now calling for a boost to investments. Deirdre Michie, Oil & Gas UK's chief executive, said: "The UKCS is in urgent need of fresh investment to boost exploration and drive activity, particularly for the supply chain.
"In light of this I am calling on governments today to vigorously champion the UK's oil and gas industry, by providing certainty in our fiscal regime, encouraging new entrants to the market and recognising our supply chain as vitally important to the economy.
"The evidence in the report demonstrates what our industry can achieve when the basin's competitiveness is addressed and the tax regime reformed.
"Now it is time for the UK and Scottish governments to reinforce their efforts to promote the UKCS, nationally and internationally, as an attractive investment with world leading capability from front end exploration to late life operations."
The industry body is also calling on the Treasury to allow the transfer of tax breaks when assets are sold and on, and to the UK Government to re-affirm its commitment to a "more competitive, simple and predictable" fiscal regime.
Under-Secretary of State for Scotland Lord Dunlop said: "The UK Government is committed to supporting our oil and gas sector, and the jobs which depend on it. That's why in the last two years we have put in place tax breaks worth £2.3bn, strengthening the North Sea's appeal to international investors as a global centre of excellence.
"While the industry is adapting to this new business environment, there are opportunities that can be seized. Production outputs are higher and there has been a significant reduction in operating costs.
"There's a determination in the sector to make a success of this new trend and create a lasting legacy for an industry that makes a huge contribution to Scotland and the UK."
Scottish Energy Minister Paul Wheelhouse said the report demonstrates that "significant opportunities" remain in the North Sea, and he added that up to 20bn barrels of oil could yet be extracted - but urgent measures are needed to give operators the confidence to continue investing.
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