* Q2 revenue up 38%

* Reaffirms 2021 production, costs forecasts

* Q2 production down ~10%

July 27 (Reuters) - Takeover target Oil Search on Tuesday reported a 38% jump in quarterly revenue and reaffirmed its annual production forecast, as rebounding demand for travel and industrial activity from reopening of economies strengthen oil prices.

Crude prices have soared more than 50% this year, fueling optimism about global oil demand returning to its pre-pandemic levels by next year.

For the quarter ended June 30, Oil Search recorded average realised oil and condensate prices of $71.55 per barrel, a more than three-fold jump from a year earlier, while realised LNG prices were 17.3% higher.

This boosted the Papua New Guinea-focused firm's operating revenue to $366.2 million, up from $266.2 million a year ago.

Oil Search earlier in the month rejected an A$8.8 billion ($6.50 billion) takeover approach from Santos Ltd, saying it was inadequate.

Oil Search's shares on Monday closed about 4% above Santos' offer price of about A$3.80 a share based on the gas producer's close - indicating investors expect a higher bid.

Oil Search, which is looking to sell a 15% stake in its $3 billion Pikka oil project in Alaska and a stake in the associated infrastructure, also said it will go ahead with a final investment decision for the project's first phase only when it has the right funding capacity in place.

Total production for the quarter came in at 6.59 million barrels of oil equivalent (mmboe), down from 7.29 mmboe a year earlier.

The company maintained its 2021 production forecast of 25.5 mmboe–28.5 mmboe and production costs of $10.50 per boe to $11.50 per boe. ($1 = 1.3545 Australian dollars) (Reporting by Sameer Manekar in Bengaluru and Sonali Paul in Melbourne; Editing by Shinjini Ganguli)