Papua New Guinea on Friday called off negotiations with ExxonMobil regarding the P'nyang gas project, casting a shadow on a $13 billion plan to double the country's gas exports by 2024.
The government said ExxonMobil had refused to budge on the financial terms for developing the gas field and failed to come up with an offer that it could accept.
The latest development comes as the US supermajor and the Port Moresby government were earlier reported to be getting closer to agreeing the key fiscal terms for the P’nyang gas project.
The P'nyang field was key to helping feed the expansion of ExxonMobil's PNG LNG liquefied natural gas plant, which it operates with partners Oil Search and Santos, among others.
The P'nyang agreement is one of two agreements needed for ExxonMobil and its partners to go ahead with their $13 billion plan to expand LNG exports. The other agreement, the Papua LNG pact, was sealed with Total in September.
"ExxonMobil's offer had barely changed from its opening offer presented last November," Prime Minister James Marape said in a statement, adding that it was not "substantially different" from a recent LNG agreement with Total.
The country is hoping Total will still go ahead with its Papua LNG project, a person close to the negotiations said.
ExxonMobil's Papua New Guinea spokesman was not immediately available to comment to Reuters.
The country's petroleum minister had said last year that the government would press ExxonMobil for "far better" terms on the P'nyang gas project than it had with the Total agreement.
The government was seeking terms that would give the state more than the 45% to 50% take that the country is set to reap on the value of Total's Papua LNG project, the person said, adding that the share was much less than the 80% take that governments like Malaysia and Indonesia have on gas projects in their countries.