Woodside Petroluem has terminated its agreement to take a 25% stake in the the $US2.7 billion ($A2.88bn) Leviathan offshore gas field in Israel, saying it will not proceed with a memorandum of understanding agreed with the parties earlier this year.
The petroleum exploration and production company said negotiations between the joint venture parties failed to reach a commercially acceptable outcome that would have allowed fully-termed agreements to be executed.
Woodside had been in discussions with Noble Energy Mediterranean Ltd, Delek Drilling LP, Avner Oil Exploration LP and Ratio Oil Exploration to acquire a 25 per cent participating interest in the natural gas project in Israel.
Woodside chief executive Peter Coleman said the decision was a difficult one and was not taken lightly.
"All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal," Mr Coleman said.
"While Woodside's commitment to growth is strong, even stronger is our commitment to making disciplined investment decisions."
Israel's largest gas field was a key part of Woodside's future growth plans, but has been repeatedly delayed, as has its Browse project in Western Australia.
The company had been in long negotiations over tax issues with the Israeli government, as well as talks with its potential joint venture partners.
Mr Coleman had previously expressed frustration with the drawn-out negotiations, but defended Woodside's expansion plans.He also previously said Woodside was yet to commit any money to the Leviathan project.
As recently as last month, Woodside said it will push to resolve lingering surrounding its Leviathan deal with a view to executing definitive agreements in the near future.
At the end of March a signing ceremony for the long-delayed deal was cancelled at the last minute due to a tax dispute.