(Makes clear that figure in paragraph 2 refers to extra output)
By Karolin Schaps
LONDON, Feb 24 (Reuters) - Britain urgently needs its oiland gas companies to pay for a new regulatory body to encourageindustry collaboration and counter plunging North Sea productionrates, a government review, the first since the mid-1990s, saidon Monday.
Britain's oil and gas output has fallen about two thirdssince its peak at the turn of the century, but reforms couldlead to 200 billion pounds ($330 billion) worth of extra oil andgas being extracted, the government said.
The North Sea is thought to contain billions of barrels ofhard-to-reach oil but with many platforms and pipelines comingto the end of their working lives, time is fast running out toget at them. The review's task was outlining how to make thateasier.
About 99 percent of oil and 60 percent of gas productionfrom offshore Britain is expected to come from Scottish watersuntil 2040.
The first strategy assessment of the country's oil and gaspotential in more than 20 years was published on the same day asPrime Minister David Cameron holds his first full cabinetmeeting in Scotland, aimed at persuading Scots - who vote onsecession on Sept. 18 - to stay in Britain.
The oil and gas industry, whose major North Sea operatorsinclude BP, Statoil and Shell, isexpected to foot the bill for the new regulator which thegovernment said will be set up immediately.
"I believe industry will have to pay, but in return shouldbe granted appropriate service level agreements," said Sir IanWood, author of the report and former chairman of oil servicescompany Wood Group, without providing figures.
Government revenues from North Sea production fell more than40 percent to 4.7 billion pounds in 2012-13, underlining thesector's importance to Britain's economic recovery.
The new regulator will block any major investments that donot sufficiently focus on extracting maximum potential fromNorth Sea fields, a move which could result in some operatorslosing their licences, Wood said.
Wood, whose report estimates that about 24 billion barrelsof oil equivalent could still be buried beneath the UK part ofthe North Sea, also recommended the regulator should enforcerules for companies to share exploration data more quickly.
"I fully back Sir Ian Wood's recommendations and we willstart implementing them immediately," said Britain's Energy andClimate Change Secretary Ed Davey in a statement.
A focus on more drilling for oil and gas in more remoteareas could benefit companies who specialise in that area suchas Seadrill, Noble or Rowan, experts inoil and gas exploration work.
"We strongly welcome the proposal for a new arm's lengthregulator with additional powers and resources...The report is agame changer," said Malcolm Webb, chief executive of Oil & GasUK, Britain's fossil fuel industry lobby group. (Additional reporting by Stephen Eisenhammer and Sarah Young;Editing by Louise Ireland)
