Woodside Petroleum : 01.03.2017 Corporate Governance Statement 2016

i Woodside Petroleum Ltd | Corporate Governance Statement 2016

1. Corporate Governance at Woodside 1

2. Board of directors 2

3. Board role and responsibilities 2

   2.2 Board composition 2

4. Chairman 3

5. Director independence 3

6. Conflicts of interest 4

7. Board succession planning 4

8. Directors' retirement and re-election 4

9. Directors' appointment, induction training and continuing

education 5

2.9 Board performance evaluation 5

2.10 Board access to information and independent advice 5

1. Directors' remuneration 5

2. Board meetings 5

3. Company secretaries 5

10. Committees of the Board 6

11. Board committees, membership and charters 6

12. Audit & Risk Committee 6

13. Nominations Committee 6

14. Human Resources & Compensation Committee 7

15. Sustainability Committee 8

16. Shareholders 8

    4.1 Shareholder communication 8

    4.2 Continuous disclosure and market communications 8

17. Promoting responsible and ethical behaviour 9

18. Woodside Compass, Code of Conduct, Anti-Bribery and Corruption Policy (ABC Policy) and Whistleblower Policy 9

19. Securities ownership and dealing 9

20. Payments to political parties 10

21. Risk management and internal control 10

    6.1 Approach to risk management and internal control 10

22. Risk management roles and responsibilities 10

23. Internal Audit 10

24. CEO and CFO assurance 11

25. External auditor relationship 11

26. Inclusion and diversity 11

27. ASX Corporate Governance Council recommendations checklist 13

Woodside Petroleum Ltd | i

ANNUAL REPORT 2016

DELIVERING VALUE GROWTH

Our Annual Report 2016

The Annual Report 2016 is a summary of Woodside's operations, activities and financial position as at 31 December 2016. Copies of the Annual Report 2016 are available on request or from the Company's website.

Further information at woodside.com.au

SUSTAINABLE DEVELOPMENT REPORT

2016

Our Sustainable Development Report 2016

The Sustainable Development Report 2016 is a summary of Woodside's sustainability approach, actions and performance as at

Additional Information

In this report, we have indicated where additional information is available online like this:

31 December 2016. The report will be available on 16 March 2017.

Further information at woodside.com.au

1. Corporate Governance at Woodside

   Woodside is committed to a high level of corporate governance and fostering a culture that values ethical behaviour, integrity and respect. We believe that adopting and operating in accordance with high standards of corporate governance is essential for sustainable long-term performance and value creation.

   This Statement reports on Woodside's key governance principles and practices. These principles and practices are reviewed regularly and revised as appropriate to reflect changes in law and developments in corporate governance.

   Woodside's Compass is core to our governance framework. It sets out our

   The company, as a listed entity, must comply with the Corporations Act 2001 (Cth), the ASX Listing Rules, and other Australian and international laws. The ASX Listing Rules require the company to report on the extent to which it has followed the Corporate Governance Recommendations contained in the ASX Corporate Governance Council's third edition of

   its Corporate Governance Principles and Recommendations (ASXCGC Recommendations). Throughout the year, Woodside complied with all the ASXCGC Recommendations.

   A checklist cross-referencing the ASXCGC Recommendations to the relevant sections of this Statement and the 2016 Remuneration Report is provided on pages 13 to 15.

   mission, vision and strategic direction and core values of integrity, respect,

   working sustainably, working together, discipline and excellence. It's the overarching guide for everyone who works for Woodside.

   Woodside's corporate governance model is illustrated below. The Woodside Management System (WMS) describes the Woodside way of working, enabling Woodside to understand and manage its business to achieve its objectives. It defines the boundaries within which Woodside employees and contractors are expected to work. The WMS establishes a common approach to how we operate, wherever the location.

   Information on Woodside's governance framework is also provided in the Governance and Compliance section of Woodside's website.

   The website contains copies of Board and committee charters and copies of many of the policies and documents mentioned in this Statement. The website is updated regularly to ensure it reflects Woodside's most current corporate governance information.

   STAKEHOLDERS BOARD

   DELEGATION ACCOUNTABILITY

   AUDIT & RISK COMMITTEE

   HUMAN RESOURCES

   & COMPENSATION COMMITTEE

   CHIEF EXECUTIVE OFFICER

   SUSTAINABILITY COMMITTEE

   NOMINATIONS COMMITTEE

   STRATEGY

   INDEPENDENT ASSURANCE

   MANAGEMENT GOVERNANCE AND ASSURANCE

   EXTERNAL AUDIT

   AUTHORITIES FRAMEWORK

   GUIDELINES

   INTERNAL AUDIT

   OPERATING STRUCTURE

   PROCESSES & PROCEDURES

   RISK MANAGEMENT

   EXPECTATIONS

   MAJOR PROJECT ASSURANCE CHECKS

   MANAGEMENT COMMITTEES

   COMPASS & POLICIES

   T

   MANAGEMENT REVIEW & IMPROVEMENT

   WOODSIDE MANAGEMENT SYSTEM

2. Board of directors

3. Board role and responsibilities

   The Constitution provides that the business and affairs of the company are to be managed by or under the direction of the Board. The Board has approved a formal Board Charter which details the Board's role, powers, duties and functions. Other than as specifically reserved to the Board

   in the Board Charter, responsibility for the management of Woodside's business activities is delegated to the Chief Executive Officer (CEO) who is accountable to the Board. The Board Charter and the delegation of Board authority to the CEO are reviewed regularly.

   The central role of the Board is to set the company's strategic direction, to select and appoint a CEO and to oversee the company's management and business activities.

   In addition to matters required by law to be approved by the Board, the following powers are reserved to the Board for decision:

   + the appointment and removal of the CEO, any other executive directors and the Company Secretary and determination of their remuneration and conditions of service;

   + approving senior management succession plans and significant changes to organisational structure;

   + authorising the issue of shares, options, equity instruments or other securities;

   + authorising borrowings, other than in the ordinary course of business, and the granting of security over the undertakings of the company or any ofits assets;

   + authorising expenditures which exceed the CEO's delegated authority levels;

   + approving strategic plans and budgets;

   + approving the acquisition, establishment, disposal or cessation of any significant business of the company;

   + approving dividends;

   + approving annual and half-year reports and disclosures to the market that contain or relate to financial projections, statements as to future financial performance or changes to the policy or strategy of the company;

   + approving policies of company-wide or general application;

   + appointing the Chairman of the Board;

   + appointing directors who will come before shareholders for election at the next annual general meeting (AGM); and

   + establishing procedures which ensure that the Board is in a position to exercise its powers and to discharge its responsibilities as set out in the Board Charter.

   A copy of the Board Charter is available in the Governance and Compliance section of Woodside's website.

   Table 1 - Details of directors

4. Board composition

The Board is comprised of ten non- executive directors and the CEO. Details of the directors, including their qualifications, experience, date of appointment and independent status, are set out in Table 1. Detailed biographies are available in the Annual Report 2016 on pages

66 and 67.

The Board and its committees actively seek to ensure that the Board continues to have the right balance of skills, knowledge, experience and diversity necessary to direct the company in accordance with high standards of corporate governance and to oversee Woodside's management and business activities.

In assessing the composition of the Board, the directors have regard to the following principles:

+ the Chairman should be non-executive and independent;

+ the role of the Chairman and the CEO should not be filled by the same person;

+ the CEO should be a full-time employee of the company;

+ the majority of the Board should comprise directors who are both non- executive and independent;

+ the Board should represent a broad range of qualifications, diversity, experience and expertise considered of benefit to the company; and

+ the number of Shell-nominated directors, as a proportion of the Board, should normally be in the proportion that Shell's holding of fully paid ordinary shares in the company bears to all of the issued fully paid ordinary shares in the company.

The directors on the Board collectively have a combination of skills and experience in the competencies set out in Table 2 on page 3. These competencies are set out in the skills matrix that the Board uses to assess the skills and experience of each director and the combined capabilities of the Board.

The Board considers that collectively the directors represent the skills, knowledge and experience necessary and desirable to direct the company. The non-executive directors contribute operational and international experience, an understanding of the industry in which Woodside operates, knowledge of financial markets and an understanding of the health,

safety, environmental and community matters that are important to the company. The CEO brings an additional perspective to the Board through a thorough understanding of Woodside's business.

The directors on the Board represent a diverse range of nationalities and backgrounds. There are three women on the Board. The Board recognises that opportunities exist to consider diversity upon future retirements of non-executive directors. The Board achieved its objective of having at least 30% female representation on the Board in 2016.1

Name of director	Term in office	Qualifications	Status (Independent or Executive)
M Chaney (Chairman)	Director since November 2005 Chairman	BSc, MBA, Hon LLD (UWA), FAICD	Independent
since July 2007
P Coleman (CEO and Managing Director)	Director since May 2011	BEng, MBA, FATSE	Executive
L Archibald1	Director since February 2017	MBA, BSc (Geosciences), BA (Geology)	Independent
M Cilento	Director since December 2008	BA, BEc (Hons), MEc	Independent
F Cooper	Director since February 2013	BCom, FCA, FAICD	Independent
C Haynes	Director since June 2011	Bsc, DPhil, FREng, CEng, FIMechE	Independent
I Macfarlane	Director since November 2016	FAICD	Independent
D McEvoy1	Director since September 2005	BSc (Physics), Grad Dip (Geophysics)	Independent
S Ryan	Director since December 2012	PhD (Petroleum and Geophysics),	Independent
BSc (Geophysics) (Hons 1), BSc (Geology)
A Pickard	Director since February 2016	BA, MA	Independent
G Tilbrook	Director since December 2014	BSc, MBA	Independent

1. Mr Larry Archibald commenced as a director on 1 February 2017. Mr David McEvoy is retiring with effect from the 2017 AGM on 5 May 2017 and is not included in the Board Members gender profile.