He also said the project would be delayed for at least 12 months.

In an email circulated to project staff last week, Cronin said Woodside was downsizing its Sunrise planning team as the partners attempted to find a workable commercial framework for the project which was suitable to all parties. He said they were scaling back the onshore technical work, signaling the end of Darwin's hopes of Timor Sea gas to shore.

Although the fiscal arrangements are far from settled, the joint venture partners, who include Woodside, Phillips and Osaka Gas, have agreed that the FLNG model is the most economically viable for the development of the Sunrise gas fields. This in turn triggered the beginning of the end for the majority of the project team who were pushing for Woodside and the Northern Territory's vision of cheap gas onshore, which would have led to a surge in mineral mining, gas processing and associated infrastructure development.

Shell's FLNG proposal, floated only months ago, is viewed by stakeholders as the one which returned the least back to the community in the way of employment and benefits, and yielded the smallest returns for the suppliers of the gas. These fiscal terms have proved the sticking point in the negotiations. Cronin said in his email that project start up is most likely to be delayed for up to 12 months while focussing on the commercial structure of the development.

Cronin said Woodside was committed to supporting the project team, made up of permanent staff and contractors, during the 'transitional period.'

Woodside sources said the basis of design would most probably be done in the Hague and come back to Perth for detailed design however other sources have suggested Houston as a design base.