By Ross Kelly 

SYDNEY-- Royal Dutch Shell PLC is selling a major stake in Australia's second-largest oil and gas producer for $5.7 billion, in the latest move by new chief executive Ben van Beurden to boost profits after years of heavy spending.

The sale of most of Shell's shares in Woodside Petroleum Ltd. is the biggest deal orchestrated by Mr. van Beurden since he took the reins in January. The Anglo-Dutch company aims to sell about $15 billion in assets globally by the end of next year, and has already raised $2.6 billion from the sale of an Australian refinery and network of filling stations.

Woodside was once the centerpiece of a strategy that would have given Shell an advantage over rivals scrambling to meet Asian demand for clean-burning fuels. In 2001, Shell launched a full takeover of the Perth-based company, but its ambitions were thwarted by Australian lawmakers who vetoed a deal on national interest grounds.

In more than a decade since then, Shell has spent billions of dollars on new Australian projects that will ship cargoes of natural gas to Asian customers with plans for several more. These include the 52 billion Australian dollar (US$49 billion) Gorgon project and its majority owned Prelude project, which aims to be the world's first using technology that can process natural gas for export at sea.

On Tuesday, Shell said it would sell a 9.5% stake to institutional investors at a small discount to Woodside's closing share price on Monday. Shell has also agreed to sell a further 9.5% interest back to Woodside.

"Today's announcement is part of our drive to improve Shell's capital efficiency and to focus our Australia growth in directly owned assets," Mr. van Beurden said in a statement.

Shell is overhauling its strategy after cost blowouts at larger projects and low natural-gas prices in the U.S. forced it to issue its first profit warning in a decade. Shell's 2013 earnings fell 38% from a year earlier to $16.8 billion, while its capital spending was 15% over initial projections, at $46 billion.

This strategic shift has involved the sale of refining assets in Europe and minority stakes in Australian and Brazilian natural-gas projects. Shell has also halted major projects in Louisiana and Alaska and moved to sell unprofitable U.S. shale properties.

Shell said it would bank $5 billion from the sale of the Woodside shares after tax. It will continue to hold up to 4.5% of the company's stock once the deals are completed, and has agreed not to sell this remaining interest for a further 90 days.

For Woodside, uncertainty over Shell's intentions had long weighed on its stock and worried senior management. Shell sold a 10% stake in Woodside in late 2010, raising questions about how quickly it would look to dispose of the remaining batch of shares.

"Shell's stock overhang was always there and from that perspective it's a positive," said Paul Xiradis, director of Sydney-based fund manager Ausbil Dexia. "There's still some issues around Woodside's long-term growth and that hasn't been addressed, but in the short-term this deal is earnings per share enhancing."

Woodside has lots of spare cash after its Pluto liquefied natural gas project in Western Australia state began shipping to customers in 2012. But last month's decision to abandon a planned $2.5 billion investment in the Leviathan natural gas discovery offshore Israel, coupled with a two-year delay in the Browse gas-export project in Western Australia, have left it with few opportunities to increase production over the next few years.

"Shell's exit at an inferior price compared to its previous sell-down price paints a grim picture for Woodside's future growth prospects," analysts at Australian broker Macquarie said.

Write to Ross Kelly at ross.kelly@wsj.com

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