The Treasury must accept significantly lower taxes from the North Sea in future to create jobs and boost investment, Chief Secretary to the Treasury Danny Alexander has said.
The Highland MP described industry warnings that plummeting oil prices below 60 US dollars (£38) a barrel could render some North Sea projects unprofitable as "a big concern".
"This is an industry that is used to dealing with very volatile prices, but clearly this is very concerning," he told BBC Radio Scotland's Good Morning Scotland programme.
"At the moment prices under 60 dollars a barrel is something that will affect quite a lot of projects in the North Sea."
He said the Government must keep improving regulation of the North Sea, drive down taxes and continue with support measures such as decommissioning, investment and exploration allowances.
The industry also has a responsibility to reduce costs and maximise the efficiency of existing production, he 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," he said.
"We have to accept that 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 whole of the UK.
"It is very important to send a message to investors around the world that the North Sea is open for business, that it is a great place to invest, that there are huge opportunities in the UK continental shelf still."
First Minister Nicola Sturgeon has faced calls for an inquiry into the Scottish Government's optimistic oil forecasting ahead of the independence referendum.
She dismissed Labour allegations that her Government was "unprepared" for the current dip at First Minister's Questions yesterday, saying that it has invested in the industry to support skills development and innovation.
Speaking on a visit to Inverclyde this morning, Ms Sturgeon said: "I think we all need to unite to help the north east oil and gas industry.
"I said very clearly yesterday that I think we need more from the UK Government around tax incentives, we need more detail about the implementation of the proposed new investment allowance, we need to be supporting exploration.
"The Scottish Government will continue to do what we can around skills and innovation, but we need serious and very definite measures from the UK Government to help - and we'll be continuing to press them to do that."
Offshore union RMT has called for a "crisis management" plan to rescue British jobs and infrastructure in the wake of the oil price slump.
It has "major concerns" about the impact of cost-cutting across the sector with workers from Total, Apache, Shell and others complaining that terms and conditions are to be cut and shift patterns altered.
Major redevelopment and refurbishment projects will be "delayed indefinitely as investment dries up", the Health & Safety Executive "will be stretched to maximum capacity trying to deal with the introduction of the new EU Offshore Safety Directive", the sustainability of production is "at risk", and the UK taxpayer faces a bill of up to £30 billion for decommissioning, it said.
RMT general secretary Mick Cash said: "In the wake of the current price slump RMT is demanding that Westminster and the Scottish Parliament adopt a crisis management approach today to ensure sustained production, maintenance of infrastructure, retention of skills, and a robustly regulated regime in the future.
"If immediate action isn't taken then we risk turning today's crisis into longer term damage that would threaten the very core of our offshore industry.
"With tens of thousands of jobs at stake, along with the prospect of lasting damage to infrastructure, production capacity and the safety culture, intervention is absolutely critical and that is the case that we are setting out today to the politicians north and south of the border and from all sides."