Arrow Energy is planning to cut jobs and reduce costs at its coal seam gas (CSG) project in central Queensland after key shareholder Royal Dutch Shell downgraded its profit forecasts.
Hundreds of jobs are believed to be at risk at Arrow which employs 1200 people.
A spokesman confirmed the company has conducted a review of staffing levels as it cuts costs.
But he was unable to give details of the number of jobs at risk.
"While the company acknowledges this will be a difficult time for employees, it is committed to supporting them through this transition," the spokesman said.
"The company remains focused on finding additional value and reducing overall costs."
The spokesman added that Arrow would continue to assess development options, including joint venture opportunities, as it looks to develop its gas reserves.
Last year the Queensland government gave Arrow's proposed $15 billion, 18 million tonne liquefied natural gas plant at Gladstone the green light.
The prospect of job cuts comes after Shell said its fourth quarter 2013 profit figures, which will be released on January 30, are expected to be significantly lower than recent levels due to current oil and gas prices and the weaker downstream oil products industry.
Shell is focusing on improving capital efficiency and strengthening its operational performance and project delivery.
Arrow, which is focused on the exploration, extraction and use of coal seam gas, is 100 per cent owned by Shell and PetroChina who formed a 50/50 joint venture partnership to acquire Arrow for $3.5 billion in 2010.
Analysts say Shell's profit downgrade is unlikely to affect the company's future investment in joint venture projects such as Gorgon, Browse and its Prelude floating LNG (FLNG) project in Western Australia.