The North Sea is set to end its seemingly terminal decline over the next few years, with new entrants and better technology set to push production up by about a third to 2 million barrels a day by 2017.

Britain’s oil and gas output is set to dip again this year, putting it between 3 and 6 per cent lower than 2012’s figure of 1.55 million barrels, according to the industry body Oil & Gas UK. However, tax breaks, improving extraction techniques and the sustained high price of oil have made production from the North Sea’s dwindling oil and gas fields more viable. This has prompted record levels of investment, with £40bn set to be ploughed into North Sea production over the next three years by companies such as BP, Total of France and China’s Sinopec.

Despite the resurgence in the North Sea, which analysts have forecast could create 50,000 new jobs, production will remain well below its peak level of about 4.5 million barrels in 1999. Drilling for North Sea oil and gas took off last year, as the number of new exploration and appraisal wells jumped by a third to 65.

The number of North Sea deals also jumped last year, rising by 30 per cent to 80, according to Deloitte. These were split evenly between outright purchases of oil and gas fields and so-called farm-ins, where a company injects cash into an existing field to help fund its development.

In October the Department of Energy and Climate Change awarded a record 167 new licences on 330 North Sea blocks, implying that production will continue to increase beyond 2017.

The North Sea has also tempted back the veteran oil and gas developer Algy Cluff, who shot to prominence with his first company, Cluff Oil, in the 1970s. His fifth company, Cluff Natural Resources, listed on Aim last year with a focus on the North Sea.