LONDON, Feb 24 (Reuters) - Investment in British North Seaprojects is expected to fall below 8 billion pounds ($12.35billion) in 2016 from 14.8 billion last year, and could shrinkfurther due to a rise in costs and fall in prices, industrylobby group Oil & Gas UK said in an annual survey on Tuesday.
Falling investment means much of Britain's remaining oilreserves will not be extracted, said Malcolm Webb, chiefexecutive of Oil & Gas UK, casting doubt on a North Sea revivalwhich the government hopes will help fill its coffers.
"Without sustained investment in new and existing fields,critical infrastructure will disappear, taking with it importantNorth Sea hubs, effectively sterilising areas of the basin andleaving oil and gas in the ground," Webb said.
Global oil companies including North Sea investors Shell and BP, have announced billions of dollars incapital expenditure costs following a sharp fall in oil pricessince June.
The industry has repeatedly called for cuts to North Seataxes to help tackle costs which have risen to a record high18.50 pounds per barrel of oil equivalent.
Britain's finance minister has promised to reduce taxes anddetails are expected in next month's budget announcement.
"We're now looking at what more we can do to work withindustry to support investment in this important sector," GeorgeOsborne said in a statement on Tuesday.
($1 = 0.6478 pounds) (Reporting by Karolin Schaps; editing by Jason Neely)