The damage to industry over the last six months from lower oil prices is stark. In its latest report, Wood Mackenzie, a source of commercial intelligence for the world’s natural resources sector, identifies $380 billion of capex deferred by total project spend in real terms since the oil price plunge began in 2014.

It says that deepwater oil projects have been hit the hardest, accounting for over half of the total. This represents 17 to 29 projects or 62 percent of total reserves and 56 percent of total capex. Companies are being forced to rework projects with high break-evens, large capital requirements and overall high costs – which the report suggests need to fall more to stimulate investment.

Since the oil price collapse in 2014, the tally of axed projects amounts to 68 major projects containing 27 billion barrels of oil (BOE). But, in the last six months of 2015 an additional 22 major projects and seven billion BOE of commercial reserves were deferred, on top of the 46 developments and 20 billion BOE of reserves identified previously, says the report.

“The impact of lower oil prices on company plans has been brutal. What began in late-2014 as a haircut to discretionary spend on exploration and pre-development projects has become a full surgical operation to cut out all non-essential operational and capital expenditure. Tumbling prices and reduced budgets have forced companies to review and delay Final Investment Decisions (FID) on planned projects, to re-consider the most cost-effective path to commerciality and free-up the capital just to survive at low prices,” says Angus Rodger, Principal Analyst – Upstream Research for Wood Mackenzie.

According to its report ‘Pre-FID project deferral update: deepwater hit hardest’, the list of ‘axed-for-now' projects has grown by over a third in the last six months, as more and more projects are deferred through the down-cycle. “For all 68 projects there are multiple elements contributing to delay. Price is rarely the only factor slowing down FID - but it has exerted the strongest influence,” says Mr. Rodger.

“One reason we are seeing a growing list of delayed projects is cost deflation” – or to be more accurate, the need for costs to fall more to stimulate investment, he suggests. The analysis shows that this is where deepwater has made the least gains: “The biggest jump in pre-FID delayed projects over the last six months was in the deepwater, rising from 17 to 29, where costs have only fallen by around 10 percent despite the global crash in rig day-rates. Despite the size of these fields, the combination of insufficient cost deflation and significant upfront capital spend has discouraged companies from greenfield investment in the sector,” he adds.

This global analysis reveals which countries are worst affected. “The countries with the largest inventory of delayed oil projects are Canada, Angola, Kazakhstan, Nigeria, Norway and the U.S., which hold nearly 90 percent of all deferred liquids reserves. This includes oil sands, onshore, shallow-water and deepwater assets in both greenfield and incremental developments,” he says.

“Those with the largest gas reserves are Mozambique, Australia, Malaysia and Indonesia, which combined hold 85 percent of the total volume. The majority of this gas is found offshore, primarily in deepwater locations, and requires complex and expensive development solutions, including greenfield LNG and FLNG”, he adds.

“By 2021 deferred volumes will reach 1.5 million b/d, rising sharply to 2.9 million b/d by 2025,” he predicts.

The report’s findings conclude that FIDs on many of these projects have been pushed back to 2017 or beyond, with first production currently targeted between 2020 and 2023.

But, against a backdrop of overwhelming corporate pressure to free-up capital and reduce future spend – to the detriment of production growth – “there is considerable scope for this wall of output to get pushed back further if prices do not recover and/or costs do not fall enough,” says the report.

Companies are also now being forced to re-evaluate how they can profitably develop large, high-cost conventional resources at low prices.

“Not only are we seeing a genuine push towards standardization, but low prices will also promote a level of innovation so far only seen in U.S. tight oil. The pace of capex and opex deflation may therefore surprise on the upside in 2016,” says Tom Ellacott, Vice President of Corporate Analysis for Wood Mackenzie.

“We expect oil prices to start recovering during the second half of the year, which should encourage first-movers to kick-start investment and lock-in gains from cost deflation ahead of the herd,” he adds.

Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website