But Gorgon sources have said the project partners expected CNOOC to restart negotiations after looking at prices, volumes and shipment timings from other projects around the world, the newspaper said.

In 2003, the Gorgon partners -Chevron, Exxon Mobil Corp and Royal Dutch Shell – agreed to “place a significant volume of Gorgon LNG for use in the growing Chinese market”.

But translating the agreement into contracts has proved difficult with CNOOC arguing Gorgon’s price should be equal that charged by the North West Shelf project when it sold gas to China’s terminal in Guangdong province.

CNOOC’s withdrawal from talks comes less than a week after the project partners moved the $11 billion Greater Gorgon gas project into its front-end engineering and design phase, awarding more than $A100 million of contracts to construct the Western Australian project and secure equipment.

Interests in Gorgon are: Chevron (operator) 50% interest, Exxon Mobil 25% and Royal Dutch Shell 25%.