A sharp pick up in deal-making in the oil and gas sector in recent weeks has scope to accelerate as oil prices recover, advisory company EY said in a report.

While the number of deals in 2016 dropped year-on-year by 27 per cent, their value rose to $395 billion from $340 billion in 2015.

Executives’ appetite for acquisition clearly grew after Opec and major non-Opec oil producers agreed to cut output in November, boosting prices and instilling confidence that a recovery was under way. ExxonMobil BP, Total and Statoil all signed major deals in the last few weeks of the year. Royal Dutch Shell announced $4.7 billion in asset sales, including a large chunk of its North Sea portfolio in what many analysts saw as a bellwether for M&A activity due to its relatively high operating costs.

"Transactions took a back seat to the more urgent task to adapt to new economic realities in the sector last year. A number of deals were initiated but not completed amid ongoing volatility," Andy Brogan, EY Global Oil and Gas Transaction Leader said.

"We expect to see the momentum that began in the fourth quarter of 2016 continue in the year ahead."

Oil prices have gradually recovered since January 2016, when they sank to a 13-year low of $27 a barrel, forcing companies to slash spending.