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What: Shares of InterOil (NYSE: IOC) fell 12% today as pressure on the company’s liquid natural gas, or LNG, project continues.

So what: Last week, InterOil’s shares plunged after Papua New Guinea’s government said the current LNG project the company is planning doesn’t meet their previous agreement. Today, shares are sinking after the company hired Morgan Stanley (NYSE: MS) and UBS (NYSE: UBS) to find a joint partner for the LNG project.

Now what: InterOil almost certainly needs a partner for the project simply based on the size the government of Papua New Guinea is requiring. The question now becomes how good, or bad, the terms of that venture will be for InterOil. LNG is attractive when oil prices are high, but with oil sinking it’s hard to see why experienced LNG operators will bid attractive prices for the project.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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