Statoil has a controlling interest in the Kristin natural gas export project that envisioned an 18-mile pipeline connected to the nearby Polarled natural gas pipeline.
"It is a necessary decision that has been taken by the [Kristin gas] partners. With the deteriorating project economics, we did not see grounds to continue the [Kristin gas] development," Statoil's Polarled development project director Hakon Ivarjord said in a statement.
Statoil said Kristin represented less than 5 percent of what was expected from Polarled and terminating the project has no bearing on the execution of the latter.
"The opportunity for the future connection of the Kristin field to the Polarled pipeline is maintained as necessary connection points continue to be part of the project," the company said in a statement.
Kristin came on stream on Nov. 3, 2005. Statoil said it is producing about 350 million cubic feet of natural gas per day from 12 production wells.
Polarled is a 300-mile natural gas pipeline servicing the Aasta Hansteen and other fields in the Norwegian Sea.
Last year, Statoil said a pipeline connecting Kristin and Polarled would be the deepest in the world at 4,200 feet below sea level.