The North Sea, which brought upheaval to global oil markets in the 1980s just as shale has in this decade, is desperately seeking tax relief in Wednesday’s British budget.

As international oil prices continue their downward spiral, North Sea producers are among the biggest victims. Production is less than half its peak in the 1990s and a quarter to a third of its U.K. fields are uneconomic at current prices, BP Plc Chief Executive Officer Bob Dudley said in February.

Royal Dutch Shell Plc, Europe’s largest oil company and a pioneer in developing the North Sea, signaled the region was entering its twilight when it announced last month it was planning to dismantle one of its four Brent platforms.

Brent, one of the largest fields discovered in the North Sea, which has produced about 4 billion barrels since 1976, gives its name to the grade of oil that provides the price benchmark for two-thirds of the world’s crude.

“If things stay as they are, the short- to medium-term outlook for the North Sea, in terms of maximizing the recovery of the U.K.’s oil and gas resources, will remain negative,” London-based broker Peel Hunt LLP said in a note to clients.

The industry is counting on Chancellor of the Exchequer George Osborne to help with tax cuts on Wednesday when he delivers the government’s last budget before May’s general election. The group that represents oil and gas companies wants the tax on North Sea profits cut and a simpler and more generous tax break for investment.

“Tax changes are vital,” Malcolm Webb, CEO of lobby group Oil & Gas UK, said in a statement on Monday. Action “is urgently needed in order to help re-establish the competitiveness of the U.K. oil and gas industry.”

Investment in the North Sea is on the verge of collapse with oil futures in New York dipping below $43, its lowest level in six years. The area is already beset by sky-high costs, rapidly depleting fields and uncertainty about who pays to decommission old platforms.

Production costs mixed with the tax burden meant cash flows for North Sea operators were a negative 5.3 billion pounds ($7.8 billion) last year, Webb said.

As oil continues to test new lows, companies are lining up to sell assets, only to find there are no buyers.

BG Group Plc, Apache Corp. and Marathon Oil Corp. are among companies that have explored a sale of their North Sea assets. The Financial Times reported Russian billionaire Mikhail Fridman is preparing to sell a dozen gas fields in the North Sea to avoid problems that would prevent LetterOne Group from buying RWE AG’s Dea.

In total, assets worth as much as 20 billion pounds are currently for sale in the North Sea, according to investment bank Evercore Partners Inc.

The North Sea as victim of low oil prices marks a sharp contrast from its glory days. In the oil rout of the 1980s, when new oil coming onto the market also prompted the Saudis to hold the line on their own production, the North Sea, Alaska and several smaller new entrants, were responsible for upsetting the established balance in the market.

Now weakened by time, the North Sea operators will be raptly watching Osborne’s budget. Oil producers pay a total of 60% tax on profits: a supplementary levy of 30% in addition to the regular corporation tax at 30%.

In December, the government announced several measures to encourage North Sea investment, including reducing the supplementary tax to 30% from 32% on producers and adding incentives to carry out seismic surveys in under-explored areas. Last month, Osborne promised to take further action to help the North Sea after oil prices fell by more than half in less than six months.

“It’s offshore and a harsh operating environment,” said Jason Gammel, an analyst at Jefferies LLC in London. “You can see operating expenses at particular fields as high as $50 a barrel, clearly not generating much profit in the the current oil price environment.”

Source: Bloomberg