The company, openly criticised recently for its lack of growth plans, terminated the $US2.5 billion ($A2.7 billion) deal to buy into the Israeli gas venture, blaming a failure to reach a commercially acceptable outcome.

Woodside was to acquire a 25% stake in each of the 349/Racheal and 350/Amit petroleum licences.

"All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal," Woodside CEO Peter Coleman said.

"While Woodside's commitment to growth is strong, even stronger is our commitment to making disciplined investment decisions.

"I would like to acknowledge and thank the Leviathan Joint Venture participants and the Israeli Government for working with us."

Woodside's commitment to disciplined investment decisions was a value Coleman was keen to point out at the company's AGM earlier this month, defending the company to shareholders eager for direction.

"Those runs cost wickets," he said.

"This is a cyclical business and we're starting to see some things firming up."

The major is admittedly not pressured to make any quick calls by its financial situation, ending 2013 with cash and cash equivalents of $US2.2 billion ($A2.4 billion).

A number of issues became apparent over the course of Woodside's bid to wrangle the Leviathan deal, with an ever-increasing domestic gas allocation, decreasing onshore processing plans, and the inclusions of a large pipeline component to a project that would see gas piped to Turkey.

All this aside, Coleman said the decision to terminate the MoU was not taken lightly.

The Leviathan field is estimated to contain a 2C contingent resource of 19.9 trillion cubic feet of natural gas and 34.1 million barrels of condensate, making it the largest gas field discovery in the past decade.