SYDNEY: Australian energy firms were hit hard Friday by the OPEC cartel's decision against cutting production, with stocks tumbling across the board as oil prices hit four-year lows.
Oil and gas stocks were among the biggest losers on Australia benchmark S&P/ASX200 index as the energy sector shed 6.76 percent by early afternoon.
Santos, one of the country's largest oil and gas producers, saw its shares sink more than 10 percent, while stocks in the world's biggest miner BHP Billiton fell 3.4 percent.
"While today's large drop in both oil prices and energy stocks might turn out to have been amplified by Thanksgiving holiday in the US and thin volumes, it does seem likely that OPEC's decision creates the potential for a lower range of oil prices for some time to come," CMC Markets' chief market analyst Ric Spooner said.
Shares in Woodside Petroleum, which operates six of Australia's seven LNG processing plants, lost 5.80 percent. Origin Energy dropped 6.53 percent while Oil Search, the Australian partner in a landmark PNG gas project, declined almost 7.0 percent.
The Organisation of the Petroleum Exporting Countries, a 12-nation cartel that pumps out one-third of the world's oil, opted to stick by its output target even though prices have plunged by 35 percent since June.
Spooner said oil firms with good quality and low-cost production as well as strong balance sheets would be the winners, although the OPEC decision would make new projects difficult to get off the ground.
"There is also likely to be a decline in exploration activity," he said in a note.
"Oil prices will need to return to around US$100 to support the production increases that will still be needed in the long run creating a solid outlook for low-cost producers."
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