January 15, 2009 / 11:17 PM / 10 years ago

UPDATE 1-Woodside suspends gas project due to tough market

(Adds details, background)

PERTH, Jan 16 (Reuters) - Woodside Petroleum Ltd (WPL.AX), Australia’s second-biggest oil and gas producer, will suspend work on a proposed natural gas import project in the United States due to weak energy market conditions, it said on Friday.

The OceanWay project was to supply gas consumers in the west coast city of Los Angeles and includes the construction of an underwater liquefied natural gas (LNG) receiving facility off the Californian coast.

Woodside Natural Gas President Steve Larson said the company still believed in the value of supplying LNG to Los Angeles but was withdrawing its application for the time being due to current market conditions.

Woodside, which operates Australia’s biggest LNG venture, the North West Shelf project, has been seeking to gain access to the key North American market for its large undeveloped gas reserves.

But the project had faced obstacles.

Larger rivals have so far failed to convince Californians to accept construction of terminals on or near the mainland, with a similar plan proposed by BHP Billiton Ltd (BHP.AX)(BLT.L) rejected in 2007 after strong public opposition.

Woodside’s OceanWay project has been under under review by regulators, led by the U.S. Coast Guard and the City of Los Angeles, since September 2007.

Shares in Woodside (WPL.AX) rose 0.6 percent to A$34.26 at the start of trading on Friday. (Reporting by Fayen Wong; Editing by James Thornhill)

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