Oil and Gas UK has said the industry will remain a significant employer despite figures showing offshore tax receipts fell to just £35 million in the last financial year.

The industry body urged the sector to continue to reduce operating costs as tax revenues dropped to their lowest since the mid-70s when North Sea production took off.

The latest figures from HM Revenue and Customs show offshore corporation tax raised £538 million in the financial year 2015/16, but that was offset by petroleum revenue tax rebates of £503 million.

The £35 million difference compares with tax revenues of around £2 billion in 2014/15 and almost £11 billion as recently as 2011/12.

UK Chancellor George Osborne announced a series of tax cuts for North Sea oil and gas fields in his March Budget, including effectively abolishing petroleum revenue tax by permanently reducing the rate from 35% to 0%.

But the Office for Budget Responsibility has forecast that receipts will be negative until 2020/21, with repayments expected to be around £1 billion higher than payments in each year as operators struggle with the continuing oil price slump.

Mike Tholen, economics director at Oil and Gas UK, said: “At around 40 US dollars (£28) per barrel, oil is still more than 60% lower than it has been over the last three years. In these conditions, the UK North Sea industry will continue to struggle to sustain its current scale.

“More than £330 billion in 2014 money has been paid to date on UK oil and gas production, however, HM Treasury has noted that tax take on production will fall in 2015/16 and fall further by 2021.

“Despite the projected fall in production taxes which is a consequence of the current low oil prices, industry will remain a significant employer, provider of energy security, hub of innovation and leader in the export of goods and services to overseas markets.

“Although the sector has seen success recently in reducing its cost to produce a barrel of oil or gas by a third, unfortunately the indications suggest that the oil price will remain lower for longer, so it’s crucial the pace of these efforts doesn’t abate.”