An estimated $50billion has been removed from a forecast of capital investment in Norway over the next four years.
Wood Mackenzie said the change is based on more than 10 projects being deferred or scrapped to cut costs.
The latest study by the energy analysts said there is still three billion barrels of pre-final investment decision (FID) projects sitting waiting for sanction.
The timing of these is expected to be crucial in determining the costs of the kit required for development.
Malcolm Dickson, principal analyst for Upstream Oil and Gas for Wood Mackenzie, said: “Companies are seeking lower cost solutions, be that from cheaper market rates, or different development options.
“The best time to FID from that point of view is before 2018, after which we expect demand to pick up in line with oil price recovery. This will push costs up in the global supply chain, and there could be a demand crunch at that point.
“Mid-2017 is the bottom if you believe in oil price recovery, as we do. That means that cost inflation will begin to creep into fields from 2018 onwards. FID in the next year or so would make sense to capture lower costs.
“However, cost optimisation can trump everything. Too many of those projects have breakevens in excess of US$50 a barrel – and simplification, standardisation and optimisation, not cyclical benefits are the keys to new investment.”
Wood Mackenzie’s research showed that this year, subsea equipment, drilling and seismic will see the most cost deflation.
Based on a recent survey, it was found independent oil companies are more optimistic of further deflation in 2017, while the supply chain foresses an earlier demand uptick.