Two-thirds of North Sea oil and gas industry operators have been forced to cancel projects because of the recent fall in the oil price, according to a survey. Confidence was found to be at an “all-time” low in the sector and activity levels were down in line with the declining oil price, which fell below $50 per barrel this year before staging a modest recovery.

An increase in decommissioning, as oilfields are taken out of service, was described as “a bittersweet positive”, with more than 80% of contractors involved in that work seeing increases in activity in the last 12 months.

The report, published on Thursday, revealed that contractors’ confidence in the UK continental shelf, where North Sea oil and gas are located, is at its lowest point since the survey began in 2004. Only 7% of respondents said they were more confident about their activities there than they were a year ago, compared to 76%, who were less confident. The percentage of firms that reported working at or above optimum levels in the North Sea had also fallen to its lowest level since the survey began.

The findings are contained in the 22nd Oil and Gas Survey conducted by the Aberdeen and Grampian Chamber of Commerce in partnership with law firm Bond Dickinson. It was revealed that 70% of all firms involved in exploration reported seeing their value fall in the past 12 months, with just 8% expecting the value of exploration to increase in the coming year.

Tax issues were cited by 81% of contractors as a constraint on their activity in the UKCS – an increase from 28% in the last survey.

Uisdean Vass, oil and gas partner at Bond Dickinson, said: “The UK oil and gas sector is going through a regulatory and fiscal transition at blistering pace and ... companies in the sector are understandably increasingly concerned about how they will be affected.

“Decommissioning is the bittersweet positive in the survey. Academics have been predicting an imminent spike in decommissioning for years, but that spike is now well and truly upon us. Decommissioning is not driven by oil price or demand and could be very important in maintaining the value of activity in the North Sea – but the inevitable downside is that it hastens the decline of offshore exploration and production.”