It said however that taking full advantage of such opportunities would require massive investment in infrastructure and an internationally competitive regulatory framework.
The upbeat outlook for gas and the need for a relevant energy policy was contained in remarks by Santos' Managing Director, John Ellice-Flint, in the Company's 2002 annual report released today.
"While nominal oil prices have been extremely volatile over the past 30 years, there is a long-term upward trend," Mr Ellice-Flint said.
"Over the past three years, and excluding the recent increases, the West Texas Crude price has averaged around US$27 a barrel."
Ellice-Flint said Australia had the potential to benefit from these higher long-term oil prices.
"While we are not a major oil producer, we do have abundant supplies of natural gas," Ellice-Flint said.
"Developments in shipping and pipelines are now reducing the tyranny of distance and breaking down the barriers of remoteness which have confined about 70% of our gas sales to domestic markets.
"These sales have historically been, by world standards, at very low prices and such cheap sales are not in the interest of future generations.
"With our low sovereign risk, improving transportability and strong world energy prices - we have an opportunity to become a major supplier of natural gas to global markets at global prices.
"Taking advantage of such opportunities will require massive investment in infrastructure and an internationally competitive regulatory framework.
"These are the challenges facing Australian energy policy."
Ellice-Flint told shareholders that the immediate outlook for oil prices would obviously be heavily influenced by the course of developments in the Middle East - and could fall significantly when tensions are resolved.
"Looking beyond the current tensions, however, demand and supply factors suggest that US dollar oil prices (West Texas) are more likely to settle around the mid-twenties over the medium term than to fall back below US$20 a barrel, which was the norm in the 1990s," he said.
"Santos for its part, is working actively to take advantage of these opportunities through rapid development of its increasing gas interests in northern Australia."
