SYDNEY, Aug 22 (Reuters) - Woodside Petroleum Ltd (WPL.AX: Quote, Profile , Research), Australia's largest independent oil and gas producer, said it was considering exiting Africa and restructuring its portfolio to focus on its liquefied natural gas (LNG) business.
Perth-based Woodside said it was considering a range of options for its African business, including trading the assets with other companies for a stake in various projects, spinning it off into a separate firm, or a direct sale of the assets.
"We are in the process of restructuring our exploration portfolio," CEO Don Voelte told a results briefing on Wednesday. "We plan to refocus on our LNG business and other areas which are more attractive."
Woodside's African business includes the Chinguetti oil project in Mauritania, where output has disappointed since production began in February 2006.
Other African assets include exploration ventures in Libya and Kenya and a stake in the producing Ohanet natural gas venture in Algeria.
Voelte said he saw strong growth potential in LNG and the company was in discussions with potential Asian buyers of LNG from its projects.
Demand for clean-burning LNG -- led by the United States, China and India -- is forecast to triple by the end of the next decade due to economic growth and environmental concerns.
Woodside's proposed shift suggests it may be seeking to emulate the tightly focused gas strategy which has helped make Britain's BG Group Plc (BG.L: Quote, Profile , Research) one of the most highly-valued companies in the oil and gas industry, based on share price-earnings ratios.
"Things are breaking loose for us in this industry and people are trying to grab whatever gas supplies they can get hold of," Voelte said.
Flat production from existing suppliers, delays in planned and possible projects as well as increased demand from both traditional buyers and new market entrants were driving up LNG prices, said Voelte, adding that average Asian LNG prices were often above those in the Atlantic.
Last month, Woodside approved the 4.8 million tonnes per year (mtpa) Pluto LNG project off the Western Australia coast, which it has estimated will cost more than A$12 billion.
The company said it was evaluating options for the proposed 10 mpta Browse LNG project off the northwest coast of Australia and had acquired two new exploration blocks adjacent to its existing Browse gas fields earlier this year.
Expansion of the fifth processing train at its North West Shelf project is facing cost pressures but the final cost is expected to be under A$2.6 billion, Woodside said. First LNG from the fifth train is expected by the fourth quarter of 2008.
Woodside posted a 10.6 percent rise in first-half net profit to A$545.4 million ($436.3 million), below analysts' forecasts for around A$557 million.
The company said full-year production would be 72-78 million barrels of oil equivalent (boe), a forecast first made in February. Woodside has downgraded its production outlook twice from an initial forecast of 90 million boe.
"Most things seem to be in order and there's a strong cash flow. The move to rationalise some of its assets and focus on LNG is a big plus and that will obviously be a huge profit driver for the company in future," said Gavin Wendt, a resource analyst at Fat Prophets.
Reported net profit rose 16.3 percent to A$610.1 million, thanks to increased production and the sale of its equity in the Legendre field off Western Australia, which helped offset the negative hit from a strong Australian dollar and higher depreciation.
Woodside's shares, which have risen about 4.5 percent so far this year, closed virtually flat A$40.99.
Woodside, 34 percent-owned by Royal Dutch Shell Plc (RDSa.L: Quote, Profile , Research) (RDSb.L: Quote, Profile , Research), said January-June capital expenditure was A$1.3 billion, up 30 percent from a year earlier due to increased appraisal and development activities, particularly on the Pluto and Browse LNG projects off Australia.
Woodside's decision is another vote of no confidence in Mauritania after BG Group Plc sold its interest in the Chinguetti licence earlier this year and Premier Oil Plc (PMO.L: Quote, Profile , Research) said in March it wanted to sell its stake. (Additional reporting by Tom Bergin in London)
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