Woodside Petroleum has defended its lower than expected forecast for output next year by pointing to a decline in sales of gas into the domestic market as well as maintenance shutdowns for the shift.
Output in 2014 is forecast at between 86 million and 93 million barrels of oil equivalent, a modest rise from the 2013 output of 86 million to 88 million barrels of oil equivalent.
"This increase may be below some analyst expectations," chief executive Peter Coleman told analysts. The shortfall is due to the expiry of sales contracts of some low-margin domestic gas, as well as the planned maintenance at the North West Shelf processing plant.
Some of these units should have been shut down for routine maintenance a few years ago, Mr Coleman said, but it was deferred, with the group now moving back to a regular maintenance program.
Negotiations are continuing for the planned Leviathan export gas project in Israel, amid speculation that the local partners in the project want to pipe gas to Turkey, rather than liquefying the gas for shipping, where Woodside has expertise.
"There is still opportunity for Woodside to create considerable value for the joint venture," Mr Coleman said, the focus also on generating a return for Woodside shareholders.
Marketing was under way for gas to be sold from the large Browse project off Western Australia, Mr Coleman said, and he visited Japan recently to meet prospective customers, amid speculation north Asian buyers are seeking to force down gas import prices, which are linked to the oil price.
"It is too early to say how much is sold," Mr Coleman said of the Browse talks."We'd like some certainty as we move into the FEED [front-end engineering design], although it is not a precondition."
Woodside said spot gas prices in northern Asia had risen with "a tightening market that should prevail for the next several years".
Domestic media reports in Japan in recent weeks state the spot price has risen 30 per cent since May to nine-month highs of about $US18 per million btu [British thermal units].
The rise reflects a rundown in stocks against the backdrop of strong demand not only from Japan but also in south Korea and China, according to the reports.
Mr Coleman said further exploration around the Laverda reserves is needed so an economic option could be pursued for its potential development.
Along with the recent success in acquiring acreage in New Zealand, Woodside has acquired additional exploration acreage off Ireland.