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The local sharemarket dropped below 7000 points, with the S&P/ASX 200 closing 93.9 points lower at 6923.3 points. The energy sector was the worst performer, declining 4 per cent as Worley Parsons dropped 8.5 per cent to $13.95, and Oil Search slumped 7.2 per cent to $6.72 after the Papua New Guinea government walked away from talks with its joint venture partners Exxon and Total over LNG expansion plans in the country, threatening a broader $20 billion gas export program. Perenti Global sank 6.2 per cent to $1.44 and NRW Holdings fell 5.7 per cent to $2.95.

The materials sector declined 2.2 per cent, with BHP falling nearly 3 per cent, Rio Tinto sliding 1.9 per cen and Fortescue Metals closing 3.4 per cent lower at $11 after falling to $10.81 during the opening sell-off. However, gold miners were higher as the safe-haven metail hit $US1590, or $2382, per ounce.

Shares in Oil Search dropped 7.2 per cent on concerns its gas field activities in Papua New Guinea are at risk.

Shares in Oil Search dropped 7.2 per cent on concerns its gas field activities in Papua New Guinea are at risk.

There was also a 6.7 per cent decline in IDP Education, which offers education services to many Asian students studying in Australia, UK, Canada and the US. Australian universities are facing a ‘worst case scenario’ of a temporary ban on students arriving from mainland China coinciding with the start of the academic year.