Woodside Petroleum has left the door open to process gas from its Browse project offshore and abandon its controversial plant near Broome.
Under an agreement announced on Monday, Royal Dutch Shell, which is the world leader in floating liquefied natural gas (LNG) technology, will increase its stake in the Browse joint venture to around 26 per cent, almost matching Woodside's equity holding.
Woodside chief executive Peter Coleman on Wednesday said a final decision on whether to build an LNG processing plant at James Price Point in the Kimberley region of Western Australia would happen in the first half of next year.
"For somebody like Shell to take a larger piece of a project like this, given their global technology capabilities, we see that as a real positive," Mr Coleman told a briefing after the release of the company's first half results.
"They're committed to the James Price project, they know that but what I would say though is clearly it brings options for us."
Shell's involvement brought "alternatives" in terms of the project, but James Price Point was the "base case" for Woodside, he said.
WA Premier Colin Barnett on Tuesday reiterated his preference for the James Price Point site, saying the joint venture partners may lose the gas rights if they opt for another development scenario, and warned the project could be delayed by a year or so amid uncertain market conditions.
Oil and gas giant Chevron swapped its stake in the project for gas interests held by Royal Dutch Shell that the US energy giant aimed to eventually feed into its Wheatstone LNG project in the Pilbara.
Meanwhile, Shell is proceeding with its world first $12 billion Prelude floating LNG project in the Timor Sea, off WA.
Meanwhile, Woodside posted a first half profit net profit of $US812 million ($A777.67 million), down from $US828 million due to the costs of starting up its massive Pluto LNG project in WA.
Australia's largest LNG producer said exploration drilling at its 90 per cent-held Pluto project had failed to uncover enough commercial gas to bring on a final investment decision for its expansion.
Higher-than-expected production at Pluto was behind Woodside's recent increase to its full year production target, to a range of 77 to 83 million barrels of oil equivalent, which it confirmed on Wednesday.
Woodside shares closed $1.10, or 3.1 per cent, weaker at $34.90, recovering from their intra-day low of $34.65.
City Index analyst Peter Esho said while Pluto was contributing to Woodside's earnings, it was still a way off generating an adequate return for the size of the investment.
"The market is a little bit disappointed at the earnings composition and there's still a fair bit to do in the second half. We're not at the point where the full year number is likely to be upgraded," he said.
Woodside declared a fully-franked final dividend of 65 US cents per share, up from 55 US cents for the same period in the previous year.
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