Shell and Qatar Petroleum said they have decided not to proceed with their $6.4 billion (£4.2bn) petrochemical project in the Gulf state.

The companies formed a partnership for the Al Karaana project in 2011 and planned to operate it as a joint venture, with the Qatari firm owning 80% and Shell the remaining 20%.

However, they ditched it as prices quoted by contractors showed the project – which was to be built in the Ras Laffan Industrial City – was “commercially unfeasible, particularly in the current economic climate prevailing in the energy industry”.

It is the region’s second big energy project to be shelved since oil prices began to plunge late last year.

Plans for a $6 billion (£4bn) plant by petrochemical and steel producer Industries Qatar was scrapped in September 2014.