Woodside works on waste
Woodside works on waste

UPDATE 8.35am: Woodside Petroleum chief executive Peter Coleman has criticised some of his resources peers for cost-cutting moves that do not extend beyond project deferrals.

The broadside comes as Australia's biggest oil and gas company embarks on its own productivity drive to prepare for a decade of billions of dollars of capital investments.

Mr Coleman said it was too early to discuss targets from the group-wide initiative, with staff still being told about "the opportunity identification phase".

He said he planned to provide guidance on savings targets over the coming few months.

Mr Coleman said the three-tiered Woodside initiative - revenue improvements, a review of expenditure, including dealings with contractors, and internal productivity - was "real" to produce "lasting changes".

"Think about the opportunities, think about the huge capital spend that we are about to go into over the next 10 years or so," Mr Coleman told WestBusiness.

"If we can get this right now, get this correct, before we start these projects, then we are in a great shape to make sure these projects and programs are cost effective.

"We are getting rid of waste and making the right choices.

"We believe these are real initiatives, which is why you haven't heard about them, as distinct from deferring projects. I will give you a hint of how sceptical I have been of some of the initiatives I have seen, it's simply deferring projects."

Mr Coleman would not name companies he was critical of.

The news of Woodside's productivity drive makes it the latest to join the likes of Rio Tinto and BHP Billiton to try to engineer a big reduction in their operating cost base.

BHP has cut $US3.4 billion ($3.8 billion) from its cost base since 2012 while Rio is on track to take out $US4 billion by the end of this year.

Mr Coleman was speaking after Woodside last week reported a $US1.75 billion full-year net profit and record dividends.

Woodside is spinning off record amounts of free cash, courtesy of its Pluto LNG project and only modest capital investments.

However, that is set to change.

It is set to make a final investment call on two company-defining developments - Leviathan off Israel and Browse off the Kimberley - late next year to kick off a massive investment program.

The West Australian

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