As in, the arch pattern etc, is likely to be plaster? I wonder then if that's the case it may be easier to just bash it out and put our own one inMore likely to be plaster, and there's clearly some sort of lining around the arch - likely hardboard, but could just be many layers of paper. It would be interesting to see what's underneath that. I would have expected a moulded plaster bead to run round each side/corner of that arch - usually referred to as a staff bead. I pick those out in the woodwork colour to make a feature of them, but even in the wall colour I find the resulting shadow gaps pleasing.
As an aside that is a pretty funky way to install the panelling pattern wallpaper on that chimney breast!