January 22 - According to new research study by DNV GL, 89 percent of Asia Pacific oil and gas professionals are confident about the industry outlook for 2014, but optimistic outlook is clouded by concerns over costs and uncertain oil prices.

The study - Challenging Climates: The outlook for the oil and gas industry in 2014 - is based on a survey of more than 430 oil and gas professionals and in-depth interviews with more than 20 industry executives.

Despite overall confidence in the sector, just 22 percent of operators in Asia Pacific believe they are on track to hit their targets this year. As a result, operators are having to keep a tighter rein on capital expenditure and are under growing pressure to extend the life of existing assets and increase the return on these investments.

41 percent of respondents believe that increased overall operating costs will be the biggest barrier to growth for their business and 70 percent plan to increase pressure on suppliers to curb costs.

"The Asia Pacific region is home to some of the world's most capital-intensive projects, many of which are facing major cost inflation as operators come under pressure to bring them onstream on time," said Richard Bailey, DNV GL's divisional director in Asia Pacific.

"Our research shows that these spiralling costs, coupled with a growing shortage of skilled oil and gas professionals, are causing industry leaders to re-evaluate their capital spending plans and take a narrower strategic focus in the year ahead to keep a tighter rein on capital expenditure," he added.

According to the report, in response to rising costs, operators will seek to rely on bigger supply chain partners that are more capable of providing a consistent global service. 22 percent of respondents said that their company would increase its partnership with larger partners, compared with only 6 percent two years ago.

Skill shortages are cited as the second biggest barrier to growth by 40 percent of respondents and a quarter expect to struggle to find sufficient qualified external partners to achieve their objectives during 2014.

Despite these challenges the Asia Pacific region is still considered to offer some of the most favourable conditions for investment in 2014 - Australia at 6 percent, Malaysia at 6 percent, and China at 5 percent all feature within the top five investment destinations outlined by respondents, after the USA at 22 percent and Brazil at 9 percent.

Download a complimentary copt of the new research report here.