NORTH Sea oil and gas firms must reinvent themselves to survive the downturn triggered by the crude price fall, a leading economist has warned.

Bart van Ark, chief economist of the New York-based Conference Board research organisation, said North Sea producers and services firms had to prepare for a long period of relatively low and volatile oil prices, in which a business as usual response would not be an option.

“This is becoming a crisis that will force companies to rethink what is the role of the North Sea sector,” he said, adding“Businesses need to reset, that’s the most important message here.”

On a visit to Aberdeen to talk to companies about the implications of the plunge in the crude price since June last year, Mr van Ark noted the industry was facing an unprecedented challenge.

“This is not a traditional boom bust situation,” said Mr van Ark, who stressed firms could not simply cut production and wait for demand to recover.

The Dutch economist noted global demand is pretty weak. The emergence of new players such as US shale specialists has helped change the dynamics of the market through the ability of such firms to produce oil and gas relatively cheaply.

Their success has posed big challenges for firms in the North Sea, where much production comes from mature fields that are in decline. The industry had been shielded from the effects of competition by the long boom in crude prices that ended last year.

Companies had to adapt an entrepreneurial approach and do all they could to boost productivity and increase innovation if they want to ensure the UK North Sea industry does not wither away.

Mr van Ark said the services companies that help firms in areas like drilling need to act smarter.

But they could find there are opportunities to win business in growing overseas markets. For example, exports from Iran will increase following the easing of sanctions on the country but its oil and gas industry needs to be modernised.

Mr van Ark also noted oil and gas firms could look at “adjacent” markets where their skills could be in demand. He suggested these include renewable energy, chemicals and sustainability.