A dose of doom and gloom is never a great way to start the year, but that summed up January for most of us.

According to Wood Mackenzie, about $380 billion of full-life capex (real terms, excluding abandonment) associated with 68 delayed major projects has been deferred. That’s $180 billion more than they thought it would be just six months earlier (representing 22 more impacted projects).

With the oil price continuing to struggle, the list will keep growing, WoodMac warned, with $170 billion more at risk from 2016 to 2020. “With oil prices below $35/bbl, oil and gas companies will be forced to go into survival mode in 2016. Further project delays and cuts to discretionary investment are highly likely.” There are some encouraging signs, according to WoodMac, with operators reevaluating how they can profitably develop large, high-cost conventional resources in a low-price environment with a genuine push toward more standardization and a higher level of innovation.

But the elephant in the room is future production—or rather, the lack of it. Countries with the largest inventory of delayed oil projects include Canada, Angola, Kazakhstan, Nigeria, Norway and the U.S. These hold nearly 90% of all the deferred liquids reserves resulting from the delayed 68 projects, which include oil sands, onshore, shallow-water and deepwater assets.

This represents 27 Bboe of commercial reserves delayed from the identified 68 major projects. For liquids alone that equates to 1.5 MMbbl/d in deferred volumes in 2021 and 2.9 MMbbl/d by 2025.

The industry knows that it has been here before—when Brent hit $46.50/bbl in November last year, it was compared to the January 1990 level of $23.73/bbl. Applying the U.S. inflation index equates that 1990 price to $43.20/bbl, a level similar to today.

According to Barclays’ latest analysis, the Middle East remains the only market set to see 2016 capex grow (by 6%). This includes the world’s largest national oil company, Saudi Aramco, which will hike its spending 5%. OPEC (mainly Aramco) has a high pain threshold—despite Saudi Arabia’s fiscal breakeven being just below $100/bbl, it has $750 billion in cash reserves to help it deal with a weaker oil price for years (Kuwait at $47/bbl and the United Arab Emirates at $69/bbl also are pretty well placed). This allows OPEC to maintain its activity levels and stay committed to a production strategy of 31.5 MMbbl/d.

The end result is that the (mostly) Western industry’s need to survive today by deferring production across the board will result, inevitably, in OPEC eventually being back in charge when the long-awaited industry upturn comes. Thus has it always been.

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