A total of 60,000 jobs were lost in the oil and gas sector last year - 40,000 more than expected.

Another 13,000 roles could be lost this year, according to trade body Oil & Gas UK's annual report.

The report said a drop in exploration and appraisal activity remain a "serious concern", with drilling at record lows.

A total of 300,000 jobs were still supported by the industry across the UK, 150,000 less than in 2014.

Deirdre Michie, chief executive of Oil & Gas UK, said: "There are still serious issues facing our industry which has suffered heavy job losses since the oil price slump.

"But we are hopeful that the tide is turning and expect employment levels to stabilise if activity picks up.

"Our sector is successfully re-positioning through efficiency and cost improvements. We are transforming in a way that is getting UK oil and gas back in the game."

She added: "Although we are getting to a much better place, we still need further investment to generate new activity and sustain hundreds of thousands of UK jobs.

"While industry will maintain its relentless focus on improving its cost and efficiency performance, government can continue to play its part by developing a clear energy policy that reinforces the role for oil and gas in the Industrial Strategy, supporting a sector deal and confirming in the Autumn Budget that decommissioning tax relief will be modified to support further investment activity."

The report said: "There are tentative signs that investor confidence is starting to return to the sector, and to the UK."

It also said action is needed to help unlock around £40bn worth of potential development opportunities known to be in company business plans.

Deloitte in Aberdeen said the report showed a "cautious optimism" has returned to the industry while KPMG said "the future is bright".

The report said the long-term impact of Brexit remains difficult to assess but modelled two scenarios to assess the possible cost to the industry.

In one, whereby the UK negotiates minimal tariffs with the EU and improved tariffs and favourable trade agreements with other non-EU nations, the direct cost of trade falls to around £500m a year.

In the World Trade Organisation (WTO) scenario, whereby the UK is not able to negotiate new trade deals and reverts to WTO rules, the direct cost of trade increases to around £1.1bn per year.

The report is being launched at Offshore Europe, a major industry conference and exhibition taking place this week in Aberdeen.