Norwegian oil giant Statoil said gas markets would stay challenging due to large-scale development of shale gas and LNG (liquefied natural gas) after first-quarter earnings were boosted by higher oil prices.
On top of the additional supply, economic woes have also crippled industrial demand for natural gas, forcing Statoil to signal that it might slow gas production if prices remain low.
Statoil, Europe's second largest gas supplier following Gazprom, said it expected commodity prices to remain volatile and the gas market to "be challenging in the near term".
"Gas demand is still weak and supply is growing particularly fast due to new LNG (liquefied natural gas) and shale gas in the United States," chief executive Helge Lund told reporters.
"The latter in particular will be expected to dominate the pricing picture for some time. We expect the gas market to gradually tighten and moderate price increases going forward." Statoil's adjusted earnings before interest and tax rose to 39.6 billion Norwegian crowns (€5 billion) in January-March from 35.5 billion (€4.5 billion) a year ago.
Statoil posted a profit of 11.1 billion Norwegian kroner (€1.42 billion) in the first three months of the year compared to 3.7 billion kroner in the same quarter last year. Higher first-quarter crude prices have also lifted profits for majors Exxon Mobil, Royal Dutch Shell and BP.
Mr Lund said it was too early to determine what caused BP's massive oil spill in the Gulf of Mexico, which is piling pressure on Washington to tighten offshore drilling regulations. Statoil is one of the world's top deep-water producers, with the vast majority of its output from fields in Norwegian waters. "The events and developments of the last days are obviously very serious," he said.
"It is too early to conclude what caused this but I am certain the industry and authorities will do everything to uncover what happened and reduce the chances of something similar happening again."