Outlook Uncertain

AAP

Oil Search Ltd says the economic outlook in developed countries is uncertain, with sluggish growth likely to constrain oil prices. The Papua New Guinea (PNG) focused energy company has also sounded a word of warning in its annual report that there may be too many liquefied natural gas (LNG) projects planned for the next decade in the Asia Pacific region. "While global economies have started to recover from the recession, the economic outlook in developed nations is still uncertain," Oil Search chairman Brian Horwood said. "Slow economic growth is likely to limit upward movements in the oil price," Mr Horwood said in the report released on Monday. "This, together with the natural decline in production from our existing mature oil fields, will have a direct impact on Oil Search's future earnings." The company said there had been a strong outlook for Asia's LNG growth, with the region likely to need 180 to 200 million tonnes per annum by 2020. "The strong outlook for Asian LNG demand in recent years has resulted in a large number of proposed new LNG developments, particularly in Australia," the company said. "Many of these proposed LNG projects will be required to satisfy demand, but with a choice of LNG suppliers, only the quality LNG projects are likely to have success in securing markets." Mr Horwood said that despite the challenges of 2009, the company emerged in a strong position, with the decision in December to go ahead with the PNG liquefied natural gas (LNG) joint venture able to change his company's fortunes. "It will also provide a sound foundation for a new gas industry, with legacy revenues for all stakeholders for many years to come," Mr Horwood said. Oil Search has a 29 per cent stake in the $US15 billion ($A16.38 billion) Exxon Mobil-operated PNG LNG project, with first sales expected in 2014. At 1146 AEDT shares in Oil Search were trading down four cents, or 0.68 per cent, at $5.86.

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