In another upset for the company, its takeover target Energy Partners today said it had decided to drop its planned $US1.4 billion ($A1.87 billion) acquisition of rival Stone Energy and instead consider putting itself up for sale.

In May, Greens Senator Christine Milne requested the AFP investigate claims of bribery by the company of a Mauritanian foreign official.

A month later, newspaper reports detailed corruption allegations against former Mauritanian Oil Minister Zeidane Ould H’Meida.

A Woodside spokesman yesterday reportedly said the AFP had notified the company it was going ahead with a formal investigation.

“We still believe there is no basis for the complaint,” MarketWatch quoted him as saying.

“But we recognise that a formal investigation is the most appropriate way to deal with the matters raised by Senator Milne and provides the most transparent and proper resolution.”

H’Meida was jailed in Mauritania last year in the midst of the allegations but was released in March under an amnesty agreement.

That same month Woodside reportedly offered the Mauritanian Government more than $100 million to settle a dispute over exploration tenements and evade arbitration in Paris.

Woodside has a number of exploration and development projects in Mauritania and is the operator of the offshore Chinguetti oil field, which is producing about 30,000 barrels a day.

Meanwhile, Energy Partners, the subject of a hostile $883 million takeover bid by Woodside, today said it was considering putting itself up for sale.

The unsolicited takeover target has continued to urge shareholders to reject Woodside’s bid, describing it as inadequate and opportunistic.

Woodside’s US subsidiary ATS Energy on September 28 said it had extended its $23 per share offer for EPL to October 20 and refused to raise the bid.

Woodside’s offer to buy the Gulf of Mexico producer, upgradeable to $24/share in certain circumstances, had been set to expire on that day. Its bid for Energy Partners was on the condition that the latter not buy Stone.

Energy Partners today said it has decided to terminate a merger deal it had with Stone and will pay the company an $8 million termination fee.

“While the Energy Partners board believed that the addition of Stone’s complementary properties and assets would have been an excellent strategic fit for us, the board has concluded that the exploration of strategic alternatives is in the best interests of Energy Partners stockholders,” the company said in a statement.

Both companies have agreed to release all claims between them relating to their merger agreement.