* Net profit down 40 pct
* Woodside sees oil market oversupplied for some time
* Sees spot LNG prices staying in current range for 18 months
* Shares rise as much as 2.7 pct (Adds CEO comments)
MELBOURNE, Aug 19 (Reuters) - Woodside Petroleum Ltd WPL.AX said it has stepped up marketing for its Browse floating liquefied natural gas project, but conceded it is facing a buyers' market against a backdrop of weak oil prices.
Australia's biggest independent oil and gas company reported a 40 percent slide in first-half profit on Wednesday, hit by the collapse in oil prices since June last year, but performed slightly better than expected with the help of cost cuts.
Chief Executive Peter Coleman said spot LNG prices over the next 18 months were likely to remain at the soft levels seen so far this year and while oil markets were rebalancing this would take time to play out.
"Our view is the oil market is going to remain structurally oversupplied for some time," he told a conference call.
Underlying net profit was $679 million in the six months to June, down from $1.136 billion a year earlier. Four analysts on average had expected underlying net profit of $662 million.
Woodside cut its interim dividend to 66 cents a share from $1.11 a year earlier, sticking to a policy of paying out 80 percent of its underlying net profit.
Its shares jumped as much as 2.7 percent on the results.
Despite some analysts expecting a delay, the company is still targeting a final investment decision on Browse in the second half of 2016, having moved into the front end engineering and design (FEED) phase this year.
Woodside has been able to cut cost estimates by 20 to 30 percent for the subsea and pipeline aspects of the long-delayed project off Western Australia, which analysts previously estimated at $45 billion when it was planned with a land-based plant.
Royal Dutch Shell RDSa.L , whose floating LNG technology is the template for Browse, recently said it was far from certain the partners would approve the project.
"We've moved into FEED with a belief that we'll get the project across the line. But we're also under no delusion that there's some more work to do," Coleman said.
The partners are now focused on driving down processing costs so Browse can be profitable even if oil fails to rebound, and will be marketing the gas aggressively this year.
"It's a buyer's market," Coleman said.
Woodside is relying on its recent $3.6 billion acquisition of stakes in Apache (NYSE:APA) Corp's APA.N Australian assets, including Wheatstone LNG, to grow. Coleman said further near-term acquisition opportunities may be limited.
"People aren't going to let go of high quality assets until they feel like there's not many other choices left to them."