TEN big North Sea field developments containing huge reserves have been shelved amid the crude price plunge according to analysts who have said it’s highly likely more projects could be delayed around the world.

Wood Mackenzie said oil and gas companies had moved into survival mode after deferring almost $400bn projects since the crude price rout started in 2014.

Noting that 68 major projects worth $380bn have been affected around the world, Edinburgh-based WoodMac said further delays and cuts to investment are in prospect unless the oil price rallies or costs fall sharply.

“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,” said Angus Rodger, principal analyst in exploration and production research for WoodMac.

With the North Sea one of the biggest losers in the process so far, WoodMac’s analysis suggests the outlook for the area is bleak.

The ten projects that WoodMac found had been deferred in the North Sea represented more than one in seven of the total.

The fields include two UK developments that are reckoned to contain almost 500 million barrels reserves in total. Projects of this size are few and far between in the country’s waters.

It looks highly unlikely many of the deferred projects will come back into the planning process soon.

WoodMac the 68 delayed schemes had an average break even price of $62 per barrel.

However, Brent crude has been trading at 11 year lows of around $31/bbl this week, down around 70 per cent since June 2014, when it fetched $115/bbl.

The consultancy has made it clear it thinks the UK North Sea will be hit hard by the crude price fall with many older fields facing closure in coming years and distress sales in prospect as some smaller firms try to raise cash.

The prospects for firms investing in developing big new North Sea fields will get slimmer as the kind of giants that could fund such schemes cut spending and focus resources on a narrower range of plum prospects.

Majors such as Shell had been shrinking their North Sea portfolios down to a core of the most profitable fields even before the crude price started tumbling.

“If a sector or country cannot meet new investment thresholds operators are now more likely to choose divestment over warehousing a stranded resource,” said WoodMac.

The fact that eight of the deferred projects are in the Norwegian North Sea underlines the challenges involved in operating in an area in which companies have to contend with deep water and stormy weather. This helps make the North Sea a relatively high cost area.

WoodMac found Norway was one of the six countries with most project deferrals. The others were Canada, Angola, Kazakhstan, Nigeria and the US.

It noted that deepwater projects accounted for over half of the 68 project deferrals. Companies are being forced to rework projects with high breakevens, large capital requirements and high costs.

Champions of the UK industry may take some consolation from the fact one of only six big projects approved globally in 2015 was the Culzean high pressure/high temperature field in the UK North Sea. WoodMac noted the operator Maersk had been able to reduce the project budget.

“Culzean is unique in that it also cited benefits from a new HP/HT UK tax allowance as a key driver, a rare sign of fiscal terms moving to help operators,” it said.

However, one of the deferred UK projects, Jackdaw, is a HP/HT scheme. The operator BG announced it had delayed a decision on the scheme in October 2014, months after the allowance was introduced.

BG is being acquired by Shell, which has indicated it will shrink the group’s North Sea portfolio following the takeover.

The other deferred project is the Rosebank scheme north west of Shetland, which Chevron had said may not be economic as planned even before the oil price started falling.

However, WoodMac noted costs had fallen relatively quickly in Europe.

The consultancy predicted that oil prices will start to recover in the second half of this year and said this could encourage first-movers to kick start investment in the global industry to lock in gains from cost deflation and an under-utilised service sector ahead of the herd.