As many as 40,000 jobs in the British oil and gas sector could vanish by the end of the year as the strains from the low price of oil mount, a group said.

Industry group Oil & Gas U.K. published a report Friday showing the cost to the labor sector because of the market downturn has been severe. Jobs supported by the oil and gas sector since oil prices peaked at around $100 per barrel in 2014 have fallen by 120,000. Another 40,000 losses are expected by the end of this year even as oil recovers to the $50 range, after falling below $30 per barrel earlier this year.

"We cannot underestimate the impact the global downturn in the industry is having on the British economy, nor the personal toll for those who have lost their jobs, and the effect on their families and colleagues," Chief Executive Deirdre Michie said in a statement.

British energy company BP said this year it was reducing its North Sea headcount as it moved to streamline operations during the market downturn. Royal Dutch Shell, which acquired British energy company BG Group earlier this year, continues to cut staff as it streamlines the operations for the combined entity.

A report from Michie's group earlier this year warned the North Sea energy sector is in for a long period of decline, with less than $1.4 billion in new spending expected in 2016, compared with an average of around $7 billion in the last five years.

Exploration and production, known as the upstream part of the sector, was at its highest in 10 years in 2015, though drilling activity is expected to fade in 2016. Total spending, meanwhile, is expected to decline from around $16.5 billion last year to about $12.7 billion in 2016.

According to Michie, energy companies are still spending more than they're earning, a trend she said is unsustainable without improvements in operational efficiency.

"It is looking to find efficiencies to restore competitiveness, to attract investment and stimulate activity in the North Sea," she said. "With up to 20 billion barrels of oil and gas still to recover, this region is still very much open for business."

For oil prices, Michie said operating costs are improving, moving lower by almost half from $30 per barrel in 2015.

"But to protect our industry and the skilled jobs it provides we need to see further efficiencies," she said.