Fortescue Metals Group says it scrapped a plan to invest in Canning basin explorer Oil Basins – its first foray into oil and gas – after being unable to agree acceptable terms for a deal.

In November, Fortescue had agreed to invest $4.2 million in a placement in the junior company in return for a 18 per cent stake. It had also signed a deal to buy a 25 per cent stake in the Derby Block permit under application by Oil Basins in return for spending $10 million on exploration work.