Shell said it would postpone the project to provide subsea compression at Ormen Lange, Norway's second-biggest gas field, because costs have soared and the technology is uncertain.

The field, which produces an equivalent of a fifth of Britain's gas needs, will eventually lose its natural pressure and subsea compression was seen as a cheaper alternative to building a platform.

However costs have soared across the oil sector. The Norwegian Petroleum Directorate estimates that the per unit cost in Norway has risen tenfold in 10 years.

"The oil and gas industry has a cost challenge," Odin Estensen, the chairman of the Ormen Lange Management Committee said in a statement.

"This, in combination with the maturity and complexity of the concepts and the production volume uncertainty, makes the project no longer economically feasible."

A Shell spokeswoman said: "We are not giving up on offshore compression at Ormen Lange, but we can't give any timeline (of how long the postponement could last)."

Norwegian oil services firm Aker Solution (>> Aker Solutions ASA) designed and built the compression pilot project for the field, hoping that Shell and its partners would use the technology.

Aker Solution could not immediately comment on Shell's announcement.

Subsea pumps could have squeezed more from the field and also eliminate the need to keep workers offshore but it is a new and still untested technology.

Statoil (>> Statoil ASA), however, is moving ahead with its own subsea compression project at the Aasgard field in the Norwegian Sea and expects to be the first in the world to have such a project running when it starts up in 2015.

Shell is the operator of the Ormen Lange field with a 17.8 percent stake, while Norway's state-owned Petoro has 36.5 percent, Statoil 25.4 percent, Dong Energy 14 percent and ExxonMobil (>> Exxon Mobil Corporation) 6.3 percent.

Shell said Petoro was the only partner against postponing the offshore compression project.

(Reporting by Balazs Koranyi; Additional reporting by Joachim Dagenborg; Editing by Erica Billingham)

Stocks treated in this article : Exxon Mobil Corporation, Aker Solutions ASA, Statoil ASA