The future of Woodside Petroleum's $30 billion Browse LNG project is up in the air again following a report that it is set to shelve onshore plans for the controversial development.
A Woodside spokesman on Thursday would not comment on an unsourced report in The Australian Financial Review that it had advised the federal and West Australian governments that the project was not financially viable.
A spokesman for WA Premier Colin Barnett, who has strongly supported an onshore processing plant, declined to comment.
Mr Barnett told the WA Parliament during question time that he had "not received advice to that effect from the joint venture partners at all" and that he was in continued talks with Woodside.
The report said Woodside could release a statement as early as Friday, and that the oil and gas giant had told construction workers to stand down from their work.
The decision could still leave open the construction of an offshore floating vessel to process the gas, which has reportedly been favoured by one of the project's partners, Royal Dutch Shell.
Other partners to the venture include BP, Japanese consortium Mitsubishi and Mitsui, and PetroChina.
Woodside had been due to release its decision on the gas hub, which would have been built at James Price Point near Broome in the Kimberley region, by the end of June.
The new federal Resources Minister, Gary Gray, had to clarify suggestions in March he was in favour of offshore processing, saying he would not comment on Browse after he had spoken in support of the development of floating technologies.
In contrast, Mr Barnett has said he would not support the venture unless it was constructed onshore, amid concern that jobs and economic benefits could be lost.
Last year, mining giant BHP Billiton said it was divesting its stake in the gas venture, less than four months after Chevron had sold its share of Browse.
The environmentally sensitive Browse site is estimated to hold about 13.3 trillion cubic feet of gas.