David Cameron yesterday backed Sir Ian Wood’s oil and gas industry review – signalling his support for the radical changes required to maximise North Sea recovery.

The Aberdeen industry veteran published the interim findings of his UK Continental Shelf review last month – claiming that an extra four billion barrels of oil could be produced if government, industry and regulators work together.

He hit out at the in-fighting between rival companies – describing some commercial behaviour as “very damaging”.

He now wants to force firms to share information – and even assets – for the greater good of the UK.

Those failing to do so could face tough new penalties, and could even lose their licence.

Sir Ian also said the Department for Energy and Climate Change was no longer fit for purpose – and called for a new arm’s-length regulator, paid for by companies, to lead the industry.

Gordon MP Malcolm Bruce pressed the prime minister on the report yesterday at the House of Commons.

He asked the Tory leader to welcome the record £13.5billion investment the North Sea this year, and whether he planned to act on Sir Ian’s recommendations.

Mr Cameron responded: “The Wood report is an excellent report and we are looking to put that in place because we want to maximise the returns, employment and the investment in the North Sea.

“In recent months we have seen very encouraging signs of greater investment in the North sea, not least because of the decisions taken by the Chancellor to bring into play some of the more marginal fields.

“We need to keep up with that and implement the Wood report.”

The equivalent of 41 billion barrels of oil have already been produced from the UKCS, with an estimated equivalent of 12 billion to 24 billion barrels still to come.

The sector faces a number of challenges in the future, with any newly discovered oil and gas fields generally smaller and harder to exploit.

Production has fallen by 38% in the last three years, resulting in £6billion less in tax receipts for the Treasury, while a decline in exploration led to the equivalent of less than 50 million barrels of oil being discovered last year.