The company is committed to developing the NW Moran and SE Mandanda fields in the PNG Southern Highlands, while its first non-PNG development at Nabrajah in Yemen is also proceeding.
“All three fields will come into production in 2005, thereby increasing our production base for the next two years and further driving down our likely cost per barrel,” managing director Peter Botten told shareholders in Port Moresby.
Oil Search and its joint venture partners had also made significant progress in the PNG Pipeline Project, which would transport gas from PNG to Queensland. Front end engineering and design (FEED) work was expected to be completed by the end of 2005, according to Botten.
“The commencement of FEED will assist a range of important stakeholders in the eastern and southern Australian markets to make timely decisions on whether they buy gas or participate in the PNG Gas Project in some way,” he said.
If the project was shown to be financially viable, financial close was planned for the middle of 2006, with first gas exports to eastern and southern Australian markets in late 2008 to early 2009, according to Botten.
"Our analysis shows there is little doubt that there is a growing shortfall of supply versus demand in these markets for competitively priced gas starting from 2011, increasing significantly by 2015," Botten said.
"Although there remains competition to PNG gas in these markets, we believe the commencement of FEED places the PNG gas project at or near the head of the queue to supply this large volume."
Meanwhile Oil Search and a Mitsubishi Gas Chemical and Itochu corporation consortium was also undertaking a full feasibility study for the development of a petrochemical plant in Port Moresby, which could be integrated into the gas pipeline project.
Oil Search posted a record profit for 2004, driven by record production, high oil prices and a lower cost base, Botten told shareholders. It delivered shareholder returns of 81% and was the best performing oil and gas stock on the Australian Stock Exchange.
Oil Search shares closed 12 cents down at $2.33 on Friday after oil prices fell heavily overnight.