The Treasury is set to give oil firms a boost by exempting new fields from its controversial windfall tax.
According to the Times, Treasury officials are in discussions with companies to ensure the tax does not deter North Sea oil and gas operators from developing new fields.
It is understood the Treasury is concerned this would result in a reduction in tax revenue and increase the UK dependence on imported oil and gas.
The paper said oil firms are becoming increasingly optimistic that new fields will be made exempt at an Energy and Climate Change Committee hearing tomorrow.
Chancellor George Osborne announced the £2 billion tax back in March, saying it would be levied to pay for the removal of progressive fuel tax increases.