* New investments to sink below 1 bln pounds in 2016
* Oil and Gas UK calls for industry tax cuts
* 80 fields could be decommissioned by end 2020
By Karolin Schaps
LONDON, Feb 23 (Reuters) - British oil and gas productioncould halve by 2025 if oil companies do not spend enough tosqueeze every last drop out the North Sea, industry group Oiland Gas UK warned on Tuesday.
Oil and gas companies, including former North Seaheavyweights BP, Shell and Statoil,have slashed their budgets by billions of dollars as theygrapple with a 70 percent fall in oil prices.
Britain, one of the oldest oil and gas basins, has been hitespecially hard as low revenue prospects are coupled with someof the world's highest exploration and production costs.
New investments in the UK Continental Shelf, Britain'soffshore oil and gas production area, are expected to sink toless than 1 billion pounds ($1.4 billion) this year, comparedwith an annual average of 8 billion pounds over the past years.
"The outlook where we're seeing little fresh investmentcoming is the scary bit in all of it," Mike Tholen, Oil and GasUK's economic director and author of its annual report, toldReuters.
"We're a very simple industry: if you don't keep investing, you're not likely to see a good future in the North Sea."
The British government last year cut oil and gas taxes toprevent companies from leaving the North Sea and established adedicated oil regulator to help them maximise output.
Oil and Gas UK said more tax relief is needed in nextmonth's annual budget to ensure companies continue investing,echoing demands from the Scottish government, whose economy isheavily oil and gas dependent.
The oil price fall has accelerated the permanent shutdown ofsome fields, with 21 ceasing production in 2015, and Oil and GasUK said as many as 80 could follow by the end of 2020.
Almost half of Britain's oil and gas fields will beloss-making this year if oil prices remain at current levelsaround $30 a barrel, the lobby group said.
"Were a number of these fields to cease production, theirinterconnectivity would mean many more could becomesub-commercial, known as the 'domino effect'," the report said.
As oil prices are expected to remain weak, the group expectsmore job losses in the sector this year after a fall of aroundin employment in 2015.($1 = 0.7083 pounds) (Editing by Alexander Smith)
