WASHINGTON — Papua New Guinea has called off negotiations with Exxon Mobil over developing a natural gas field there, as the two sides clashed over their financial split on the project.
“The government has signaled it is willing to play hardball to secure a better fiscal take than it achieved with its first LNG project. The ball is now back in the operators’ court as to how they will respond,” Wood Mackenzie research director Angus Rodger said in a note to investors Monday.
The Pacific nation is a major gas hub for Exxon, which has spent $19 billion developing natural gas and associated LNG export facility there, Exxon CEO Darren Woods said in a call with investors Friday.
“We’re disappointed here recently that we weren’t able to reach agreement with the government on P’Nyang [gas field], but we’re very hopeful that those discussions can move forward and continue. I think from our perspective, we’ve got to find a way to get to a win-win proposition,” he said.
Exxon Mobil had planned to expand its LNG facility there through a partnership with Total. But the breakdown in negotiations over drilling P’nyang gas is now raising doubts that the project will be completed.
“Given the waves of new LNG that have been sanctioned over the last 18 months, and with more in the pipeline to reach FID in 2020, PNG expansion is slipping further and further to the back of the queue,” Rodger said.
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