Pilbara miner Fortescue Metals Group has dumped plans to diversify into WA's shale gas sector with a small investment in oil and gas explorer Oil Basins.
The $4.2 million share placement deal, first announced late last year, was set to represent an important diversification out of iron ore for FMG.
At the time FMG said acquiring an interest in the shale gas field – known as the Derby Block – was part of securing its long term energy strategy for its operations in the Pilbara.
In a statement yesterday Oil Basins said while FMG had walked away from the deal it still retained an interest in making an investment further down the line.
When Oil Basins first announced FMG's investment in November it said the deal would be finalised within five business days, and as time wore on suspicions rose the deal might not proceed.
In its own statement yesterday FMG said while it had been negotiating with Oil Basins over a potential investment in the Derby Block, the two companies had been “unable to agree on acceptable terms on which to proceed with a transaction”.
In moves to diversify beyond iron ore FMG has previously taken interest in uranium assets in SA and coal exploration in QLD .