Britain could extract 4bn barrels of oil and gas that would otherwise be left beneath the North Sea – delivering a £200bn boost to the economy – if a proposed industry shake-up is implemented, a government-commissioned report has found.

A new high-powered regulator should be appointed to co-ordinate an all-out drive to increase North Sea oil and gas exploration and production, the report, by industry veteran Sir Ian Wood, said.

The new regulatory body would operate at arm’s-length from the Energy Department (DECC) to take over responsibility for what could be the last phase in Britain’s oil and gas age, and would be funded by the industry.

Sir Ian said DECC was now “severely under-resourced and too thinly-spread” to meet the increased workload of overseeing North Sea operations, due to the “large amount of small developments” that had emerged in the past two to three years as operators worked on more mature fields.

Sir Ian was appointed by Ed Davey, the Energy Secretary, earlier this year to produce fresh ideas to maximise oil and gas recovery from the North Sea.

His interim report on Monday estimated that full, rapid implementation of his recommendations could deliver, on a “reasonable conservative” estimate, at least 3bn-4bn more barrels of oil and gas than would otherwise be produced over the next 20 years, adding £200bn to the economy.

More than 40bn barrels have already been produced and estimates of remaining reserves are between 12bn-24bn, based on what may be viable to extract at current oil prices.

Sir Ian said the Treasury also had a “critical role to play” and more tax incentives would “almost certainly be required” to maximise recovery from mature fields. It was also “vital to find ways to stimulate exploration”, he said.

There had been hopes that Sir Ian’s review would point to the potential for a bigger addition to reserves but he highlighted the difficulties involved in operating in a mature oil province where the biggest discoveries have been made. The new regulatory body would be armed with powers to achieve greater co-ordination of activities and collaboration, mirroring the set-up in countries such as Norway.

It would work closely with companies to develop key strategies in exploration, access to infrastructure, production efficiency and decommissioning.

Sir Ian sees the new set-up building on the tripartite co-operation already existing between the Energy Department, Treasury and the industry to produce a new strategy – Maximising Economic Recovery for the UK (MER).

He also wants the industry to fully sign up to the principles of the MER strategy and make commitments to collaborate in the development of regional hubs and sharing pipelines and other installations. The industry will also be asked to make greater efforts to reduce the complexity and delays in current legal and commercial process which have hindered progress on important developments.

The Treasury and tax issues will not form part of the regulator’s remit but Sir Ian emphasises the critical role of tax and incentives in securing the future of the industry.

The report recognises the more complex nature of current North Sea operations where investment is running at record levels but exploration and production is falling and activity fragmenting into a patchwork of smaller fields.

Sir Ian said there were still frontier areas and significant emerging potential where technology is opening important new plays. He interviewed 40 companies accounting for more than 95pc of North Sea production, key government figures and regulators in Norway and Holland in drawing up his interim report.

He said: “The evidence is clear. We need to strengthen the capacity and capability of our stewardship regime to enhance collaboration significantly across the North Sea if we are to meet the challenging demands of maturity and diversity and maximise the economic benefits for both the country and the industry.”