"That's an extension too far," said BP spokesman David Nicholas, adding that preparation for the project had cost BP some US$50 million and up to 70 staff over the past 18 months.

Carbon capture and storage is an unproven new technology that works by burying the greenhouse gas carbon dioxide (CO2) produced by power plants that burn coal or gas to produce electricity.

It is considered a vital climate change fix, because the majority of the world's future heat-trapping carbon emissions will come from developing countries like China that are sitting on vast coal reserves.

BP had planned to build a power plant that would burn natural gas, extracted from the North Sea between Britain and Norway, and then pump the resulting carbon dioxide back into a depleted oil field.

But sustaining the empty Miller oil field into 2008 without a guaranteed go-ahead was too costly.

BP said the delays by the government were understandable.

"Of course we're disappointed, it was a good opportunity but just one we couldn't bring to pass," Nicholas said.