Woodside Petroleum Limited (ASX: WPL) has announced that it and its partners in the Browse Project have decided not to go ahead with it, given the current market conditions.

Those market conditions include low oil prices – and hence low gas prices – making the project commercially unattractive at this stage. Brent Crude oil is currently at US$41.79 a barrel according to Bloomberg, and while prices may hold up, there is still the major risk of further falls ahead.

Brent oil had been trading consistently above US$100 a barrel until September 2014 when prices plummeted to below US$30 a barrel earlier this year.

As the company stated in its announcement, “While significant progress was made to improve project value, this has been offset by an extremely challenging external environment.

CEO Peter Coleman said, “Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG (floating LNG) as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time.

It also suggests Woodside will pull the pin on progressing its controversial and disputed Sunrise LNG project in the Timor Sea – at least until oil prices recover – which could be many years.

Woodside’s Browse leases expire in mid-2020 and says it remains focused on satisfying its work program commitments under the Browse retention leases.

The Browse LNG project partners and their share of the project are Woodside (30.6%), Shell (27%), BP (17.33%), Japan Australia (MIMI) (14.4%) and Petrochina (10.67%).

Foolish takeaway

With Browse and more than likely Sunrise LNG projects likely on hold, Woodside will be casting its eye around for more growth levers. The company has already attempted and withdrawn a merger proposal of Oil Search Limited (ASX: OSH). Could struggling Santos Ltd (ASX: STO) be next?

In early trading, Woodside’s share price was down 1.3% to $27.02.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.