January 31, 2020 / 12:39 PM / 16 days ago

CORRECTED-UPDATE 1-Papua New Guinea scraps talks with Exxon on P'nyang gas project

(Corrects paragraph 3 to clarify that Total SA is not a PNG LNG project partner)

Jan 31 (Reuters) - Papua New Guinea on Friday called off negotiations with Exxon Mobil 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 Exxon 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 P’nyang field was key to helping feed the expansion of Exxon’s PNG LNG plant, which it operates with partners Oil Search and Santos, among others.

The P’nyang agreement is one of two agreements needed for Exxon 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.

“Exxon Mobil’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.

Exxon Mobil’s Papua New Guinea spokesman was not immediately available to comment.

The country’s petroleum minister had said last year that the government would press Exxon 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 45-50% 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. (Reporting by Nikhil Subba in Bengaluru and Sonali Paul in Melbourne; editing by Jason Neely and Saumyadeb Chakrabarty)

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