U.K. oil and gas production peaked in the 1990s, declining steadily for more than a decade.
Regions near Shetland in the North Sea are thought to hold some of the richest remaining resources, with an estimated 2.1 billion barrels of oil and gas reserves.
Water depths of more than 1,900 feet present technological challenges to unlocking the resource potential.
Alistair Darling, the British finance minister, announced plans to extend at least $259 million per field to entice oil and gas producers to develop the remote Shetland fields, The Financial Times reports.
Darling said the move was an effort by the British government to "do everything we can" to develop the continental shelf in the North Sea.
French supermajor Total is expected to benefit from the tax incentive with its $3.25 billion Laggan-Tormore gas project expected by March.
Roland Festor, the head of British exploration at Total, said Darling's tax concession played a "very important" factor in Laggan-Tormore.
"I don't think we'd be seeing companies willing to go there" without the tax move, said Darling.