The energy consulting firm says that over the next four years, oil groups will reinvest about 40 per cent of their income from more than 30 fields in the area. As the offshore work is completed, it expects the reinvestment level to fall to less than 20 per cent after 1998.

It will pick up again only when companies are faced with significant decommissioning costs as fields become depleted, it adds. The area, which contains many of the large early North Sea discoveries, produced just over one million barrels per day of oil last year with about a fifth of the total flowing from Shell/Esso's giant Brent field where a major redevelopment is nearly complete.

Other development projects are under way at Ninian, Magnus, Beryl, Tern and Dunlin to increase the amounts of oil recoverable over the next few years.

WoodMac says this work has given a boost to the area's oil reserves which account for 25 per cent of the UK total. It generated 36 per cent of total cash flow from UK oil and gas op-erations last year.

Although oil companies will start cutting sums ploughed back into projects in the area, WoodMac expects the northern fields to remain an important contributor to total offshore in-dustry cash generation for the foreseeable future.