Norwegian oil and gas major StatoilHydro has abandoned plans to build a CO2-treatment plant at the oil sands project in Alberta province in Canada, according to reports.

Previously StatoilHydro had said that the company plans to capture CO2 from oil sands project. But now the company has laid aside and will give up an application for funds of CAN $2bn which the Canadian authorities have reserved for these kind of projects, writes Norwegian business daily newspaper Dagens Næringsliv.

StatoilHydro believes that CO2 capture and storage is not the best technology in the next phase of development. Today's oil prices have not affected the decision, said a Statoil spokesperson.

There are long-term cost estimates for CO2 as a basis for the decision, said the group's spokesperson for the international business, Mari Dotterud, to the paper.

Environmental groups angry response 

Environment groups were scathing in their response and both Greenpeace and Bellona believed that the oil project now lacks any green credibility.

Bellona leader Fredrik Hauge said he believed the argument that StatoilHydro would produce oil in a more environmentally friendly way than rivals had now evaporated and that the oil project had become a great reputation burden for StatoilHydro.

But StatoilHydro CEO Helge Lund defended its decision.

He told Dagens Naeringsliv that StatoilHydro had faith in the oil sands project in Canada, even though oil prices have fallen now.

Lund said he believes the company is making a big effort for CO2 technology, for example, at its Mongstad refinery complex in Norway.

"CO2 cleaning in Canada can come later," Lund told DN.