Under the $2 billion deal announced Tuesday, Woodside's share in the development would fall to 31.3 percent from 46 percent, Woodside said.
Mitsui and Mitsubishi will help Woodside find potential financing from Japanese banks to develop the project, which could cost as much as $40 billion. The companies will also purchase about 1.5 million tons of LNG from the Browse project for an undisclosed price.
The Browse development in Western Australia is estimated to contain a combined contingent resource of about 13.3 trillion cubic feet of dry gas and 360 million barrels of condensate.
"Browse is a world-class resource and the level of interest shown during this process reflects the strong ongoing demand for LNG from premium developments," Woodside Chief Executive Officer Peter J. Coleman said in a statement.
The agreement reflects "Woodside's focus on building strategic relationships to capture value from opportunities," Coleman said.
Woodside's fellow joint venture partners in the project, including BHP Billiton, BP, Chevron and Shell, must sign off the deal before it can proceed.
Post Fukushima, Japan is increasingly relying on LNG to replace its nuclear power shortfall, as only one of its 54 commercial nuclear power plants is in operation and that facility is to close this weekend for maintenance.
Mitsui and Mitsubishi, which together account for about three-fifths of Japan's LNG imports, have been scrambling to secure supplies.
Just in the first quarter of this year compared with 2011, Japan's consumption of LNG has risen 16 percent by volume.
Australia has eight huge LNG projects under construction, which Australia's Bureau of Resources and Energy Economics says will result in production capacity increasing fourfold to 63 million tons a year by 2017.
Other Australian LNG developments on the drawing board, including Chevron's Gorgon and Wheatstone projects and Shell's Prelude LNG project have already gone to a final investment decision, but such a decision for Browse is not likely until at least next year, the Financial Times reports.
Speaking at Woodside's annual shareholder's meeting Wednesday in Perth, Woodside Chairman Michael Chaney said the proliferation of projects "is dramatically changing the outlook for the industry and positioning Australia to overtake Qatar as the world's leading LNG producer -- a position we would not have envisaged as little as five years ago."
"Despite recent turmoil in global economic markets, it remains clear that there is rising demand for natural gas around the globe."
While last year's demand was influenced by the Fukushima crisis, Chaney said, long-term growth from the Asia Pacific region alone is set to double demand for LNG from 2010-25.
Notable deaths of 2014 [PHOTOS]