A regional newspaper has reported that a major gas project could be getting shut down, but the company behind has said nothing.

Reports in the weekend edition of the Gladstone Observer, a newspaper covering a large section of rural Queensland, said 500 workers were taken off the Australia Pacific LNG pipeline project this month.

The paper also said the Australia Pacific LNG company would not confirm the rumoured job losses or corollary claims that the pipeline is being scaled down.

The company has allegedly given a mysterious response to reporters, admitting that the project “will be demobilised in a staged process”.

The Observer reports a spokesperson said “all principal contractors had been made aware of the plan to scale down operations”, but no further details on job losses or the project’s future were given.

There are reportedly less than 50 welds to complete on the pipeline.

The project was the target of recent allegations and media reports after a chemical used in the drilling process was found to contain asbestos.

The latest comment from Origin Energy, the upstream operator of the Australia Pacific LNG project, said the company was working through a comprehensive testing regime to ensure drilling rigs either have no traces of asbestos or have been verified as safe.