Maximising the economic recovery of reserves in the North Sea is surely in everyone's interest

Ansel Condray ExxonMobil chairman

He said the government's decision was at odds with the �3.5bn ExxonMobil had invested over the past five years.

"There was a sense of mutual understanding that investment would go hand in hand with maintaining fiscal stability," he said.

"However, the 'reward' was a 33% increase in taxes on new fields. It is an understatement to say that investor confidence was hit hard by this sudden change."

He said while it was difficult to estimate the scale of the damage to the industry, it would impact heavily on its future success.

Royalty waived

"The higher tax rate will reduce ongoing profitability taking funds out of the industry of over �1bn annually, according to some estimates.

"Industry will have to respond to recoup some of that by pressing for even greater efficiency.

"Jobs will inevitably be lost and there will be fewer people engaged in identifying and developing new investment opportunities."

Gordon Brown announced the rise last month

Mr Condray welcomed the government's intention to abolish the royalty payment on North Sea Oil, but claimed it would not boost the industry long term.

"Maximising the economic recovery of reserves in the North Sea is surely in everyone's interest - the companies, the nation, for jobs, for export of know-how and enhancing security of supply."

The chancellor's tax hike was also criticised by the UK Offshore Operators Association (UKOOA).

The association, which represents more than 30 offshore organisations and companies, claimed the Budget was one of "give and take".