Australian oil and gas firm Woodside Petroleum just lost a lucrative $2-billion supply deal on Thursday to sell 1.5 million metric tonnes of liquefied natural gas yearly to a Japanese consortium due to a 2-year delay in Woodside's Browse project.

In a stock exchange filing, Japan's Mitsui & Co and Mitsubishi Corp scrapped the long-term sales contract they entered into in 2012 as part of the deal that gave the consortium a 15 per cent stake in the project, The Wall Street Journal reports.

YouTube/wmpCreativeService

The delay was the result of Woodside and its partners abandoning plans for a $40-billion onshore LNG development because of the high cost. The group is considering processing the LNG offshore but have yet to make a final decision by the second half of 2015, delaying the project further.

Despite the scrapping of the sales deal, Woodside said it would continue to actively work with the Japanese consortium regarding the marketing of co-mingled LNG volumes in the Japanese market. It is also in discussions with other regional customers.

Analysts are expecting Royal Dutch Shell, one of the partners and holder of a 23 per cent stake in the project, to start selling down some of its interest in the Browse LNG project in the coming weeks as Shell chief executive Ben Van Beurden takes charge of the company.

RELATED STORIES