| Reuters | Extract
MELBOURNE - Plans to double gas exports from Papua New Guinea within the next four years are in doubt after the government walked away from talks with Exxon Mobil Corp on a key gas project needed for the $13 billion expansion.
PNG prime minister James Marape has called off negotiations with Exxon on the P’nyang field, blaming the energy giant for failing to budge on a proposed deal that was “out of the money”.
One of Exxon’s partners in the PNG project, Oil Search Ltd, said on Monday the terms the government had sought would have made the project unprofitable.
“Under the terms proposed by the state, the joint venture partners were unable to obtain a return on their investment that made the project investable and bankable,” Oil Search said in a statement to the Australian stock exchange.
Shares in Oil Search fell as much as 11.5% early on Monday in their first session since the collapse of the talks, on track for their worst one-day fall in more than four years.
The P’nyang agreement was one of two agreements needed for Exxon and its partners to go ahead with a $13 billion plan to double LNG exports from the Pacific nation.
The other agreement, the Papua LNG pact, was sealed with France’s Total SA in September.
The government was seeking terms on P’nyang that would give the state more than the 45%-50% take that PNG is set to reap on the returns from the Papua LNG project, and well above the terms Exxon negotiated in 2008 for its PNG LNG project, a person close to the negotiations said.