THE Treasury must accept significantly lower taxes from the North Sea to create jobs and boost investment, a senior MP has warned.

Danny Alexander, Chief Secretary to the Treasury, admitted industry fears over plummeting oil prices were a major concern.

Mr Alexander was speaking after an expert said the oil and gas sector, which supports thousands of North-East jobs, was facing a crisis.

Robin Allan, a director at Premier Oil and chairman of the independent association Brindex, claimed it was "almost impossible to make money" after the price of oil fell below £38 (60 US dollars) a barrel.

Mr Alexander said the Government must improve North Sea regulation, drive down taxes and continue with support measures such as decommissioning, investment and exploration allowances.

He also said the industry has a responsibility to reduce costs.

Mr Alexander added: "Obviously we have started to reduce the headline rate of tax, and that is now in a downward path over the next few years.

"We have to accept there is going to be significantly less tax from North Sea oil and gas because that is necessary to get the investment, to continue to create the jobs and support what is one of the most important employers, not just in Scotland but across the UK.

"It is very important to send a message to investors around the world that the North Sea is open for business and is a great place to invest."

Mr Allan previously warned of swingeing cuts as companies respond to falling prices.

He said: "The industry is close to collapse, and it's a huge crisis.

"This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs.

"That is painful for everyone."