Britain is considering granting the North Sea oil industry a range of tax breaks in a bid to revive the flagging sector amid oil price plunges and diminishing production.

According to a report, the UK Treasury is in talks with the trade body Oil & Gas UK to thrash out a deal which involves granting more favourable tax conditions to the North Sea oil sector.

The touted tax breaks include scrapping the 30% supplementary corporate tax levied, on top of the 30% basic rate for the oil industry.

"I think that we have to keep that headline rate moving down over the next few years," the Chief Secretary to the Treasury said, according to a transcript seen by the Sunday Times.

"This is something that, for me, takes a high priority because the North Sea is a massive employer, it is the largest industrial investor in the UK economy and it's enormously important to the north-east of Scotland."

The National Institute of Economic and Social Research (NIESR), citing figures from the Scottish government, said around two thirds of all income from profits and employment due to the North Sea oil and gas industry were retained in Scotland to a tune of over £10bn (€12.5bn, $17bn) in 2010.

However, the Office for National Statistics (ONS) revealed that the rate of profit at oil and gas exploration and extraction companies tanked to 27.6% in the first quarter of 2014 - its lowest level since the second quarter of 2009.

The Organisation of Petroleum Exporting Countries (Opec) revealed that the average oil output in 2013 from the North Sea registered its lowest level since 1977.

This represented a roughly 10% decline from the previous year of 90 thousand barrels per day (tb/d).

On 11 July 2014, chief secretary of the UK Treasury, Danny Alexander said the SNP had over-estimated revenues from the North Sea by £5bn in the 2012/13 and 2013/14 years and called their forecasts "fantastical."

Oil prices have plummeted over the last few months and hit a five and a half year low of under $60/bbl this month.

While the price has recovered slightly over the last week, it is unlikely to rise significantly unless production is cut.