UPDATE 1-Australia's Woodside Petroleum to exit Canada's Kitimat LNG project

(Adds details, background on the project)

May 18 (Reuters) - Australia's Woodside Petroleum Ltd said on Tuesday it would sell its 50% interest in the proposed Kitimat liquefied natural gas (LNG) development project in Canada, and expect a hit of about $40 million to $60 million in full-year net profit as a result.

The exit would comprise the sale or wind-up of agreements and assets on the Pacific Trail Pipeline route and at the site for the proposed facility, Woodside Petroleum said.

The proposed project's operator Chevron Canada, a unit of U.S. oil and gas major Chevron, had already decided to divest its 50% interest in December 2019, and stopped feasibility work at the site in March this year. (https://bit.ly/3op4gda)

"The Kitimat LNG proposal was designed to develop a new source of LNG to supply Asian markets in the latter part of this decade," Woodside acting Chief Executive Officer Meg O'Neill said in a statement.

"However, we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value."

(Reporting by Soumyajit Saha in Bengaluru; Editing by Rashmi Aich)