Norway's biggest oil and gas group Statoil said yesterday that it was pulling the plug on a major natural gas export deal to Poland as the parties to the deal found there was no longer any need for the agreement.

"Statoil and the state-owned Polish Oil and Gas Company (POGC) have found that no basis now exists for an earlier agreement covering substantial gas deliveries to Poland by the group," Statoil said in a statement.

The original deal, signed in 2001, foresaw exports beginning in 2008 and reaching a plateau of five billion cubic metres a year from Norway with the likely construction of a new pipeline.

As late as September, Prime Minister Kjell Magne Bondevik had expressed hopes of salvaging the export deal after talks with Polish President Aleksander Kwasniewski.

Statoil said that it was now in talks with POGC on the possibility of reduced deliveries to Poland via other pipelines.

Statoil's gas marketing manager Ole Gabriel Birkeland said that ending the deal would not cost Statoil anything.

"This is gas for the future, and we reckon instead that the gas will be distributed to the Continent and Great Britain," Birkeland told Reuters.

Statoil's shares were unfazed by the news, trading flat at 68.25 crowns by 1133 GMT. Analysts said the collapse of the deal was no surprise.

"This project looked somewhat speculative from the very start," said Deutsche Bank analyst Nick Griffin. "Pure geography suggests Poland can source cheaper gas from Russia over more expensive Norwegian exports."

The plans to export large volumes of Norwegian gas to Poland unravelled when POGC found it had overestimated demand and after Norway split up its state Gas Negotiating Committee (GFU) in 2001, allowing the contracting parties to pull out. Under the original deal, Statoil had expected to export about 50 billion cubic metres of a total of 74 billion over a period of 16 years to Poland.

Dissolution of the GFU system to comply with European competition norms and Poland's growing willingness over the past few years to satisfy demand with supplies from Russia ended any chance of the deal going ahead.

Norwegian operators' plans to boost gas exports have increasingly focused on the UK, Europe's biggest gas market which is expected to become a net importer of gas from around 2005 as domestic supplies dwindle.