Oil Search Ltd
(ASX:OSH) has warned that there may be too many liquefied natural gas (LNG) projects planned for the Asia Pacific region over the next decade.
The energy company says a natural decline in production from its existing mature oil fields and limited increases in the oil price is likely to impact its future earnings.
Chairman Brian Horwood says that while global economies have started to recover from the recession, the economic outlook in developed nations remains uncertain.
Mr Horwood says the outlook for Asian LNG growth is strong and the region is likely to need between 180 and 200 million tonnes of LNG a year by 2020.
He says that given the abundance of LNG suppliers in the region, only the quality LNG projects are likely to succeed in securing markets.
Mr Horwood says the company’s board and management undertook a major strategic review in 2009 to determine future growth opportunities.
He says the company is in a strong position and is confident about its decision to go ahead with the Papua New Guinea LNG joint venture, of which it has a 29% stake.
First sales in the project are expected in 2014.
Oil Search posted a profit of just over $149 million for calendar 2009.
