Oil giant Shell and Qatar Petroleum have decided not to proceed with their $6.4 billion Al Karaana petrochemical project in the Gulf state, the region's second big energy project to be shelved since oil prices began to plunge late last year.

Prices quoted by contractors showed the project was “commercially unfeasible, particularly in the current economic climate ”, the two companies said in a joint statement.

State-owned Qatar Petroleum and Shell had agreed on the project in December 2011; the Qatari company was to own 80 per cent of the complex and Shell 20 per cent.

The move suggests the oil price tumble may be prompting companies to formally shelve projects that were in any case looking uncertain because of changes in the industry and shifting demand projections. – (Reuters)