Liquefied natural gas production rose 8% to 699.6 billion cubic feet (15.1 million tonnes) while domestic sales gas production was 887.7Bcf, up 10% over the previous year.

"The strong growth in LNG production is primarily as a result of increased production at the ConocoPhillips-operated Darwin LNG project," APPEA chief executive Belinda Robinson said.

"This plant commenced operations in the first quarter of 2006 and its impact can be seen in the figures released today."

Crude oil production in 2007 was down 3% to 120 million barrels, while combined crude, condensate and liquefied petroleum gas production was 196.7MMbbl, a 1% decrease from 2006.

Robinson attributed this fall to a combination of shutdowns on significant producing assets and natural field decline.

APPEA also released drilling statistics that showed a modest decrease in offshore and onshore exploration drilling activity but a marked increase in expenditure.

"Despite the number of exploration metres and wells drilled decreasing, expenditure increased by around $1 billion representing a 70 percent increase. This is a stark illustration of the impact of rising costs and equipment shortages," Robinson said.

"This trend was largely mirrored in the onshore exploration arena, with exploration drilling activity falling 14 percent to 138,48 metres, but drilling expenditure rising 29 percent to $367 million."

She added the results highlighted the need to be cautious when making generalisations about exploration activity based on expenditure and this issue would be canvassed more fully at the APPEA 2008 Conference being held in Perth next week, from April 6-9.

"APPEA 2008 is an important forum for us as an industry to discuss the hard policy issues behind these figures and to provide information to policymakers considering how Australia can best use its petroleum resources to enhance our nation's prosperity," she said.