As much as £750 billion worth of oil and gas reserves remain untapped in the North Sea and the Atlantic frontier just west of the Shetland Islands, a new report from Oil & Gas UK has concluded.

According to the industry trade body's chief executive Malcolm Webb, it is estimated that there are between 16 and 25 billion barrels of oil and gas to be recovered from the region, equivalent to almost half of that extracted from the North Sea to date.

However, he added that without new technology and further government incentives aimed at encouraging private companies to invest in exploration projects, much of this potential could go untapped, thereby costing the UK economy billions of pounds.

Mr Webb argued: "Barrels left in the ground do not pay taxes, do not sustain jobs, do not help secure the nation's energy supply and provide no support to the country's balance of payments. While we may have produced nearly 38 billion barrels of oil and gas over the last 40 years, the UK still has substantial oil and gas potential."

The comments come soon after industry research found that the cost of developing a barrel of hydrocarbons has risen by a factor of five over the past seven years, while gas and oil prices have merely trebled over the same period.