Norway-based Equinor has decided to delay the development plan of its Bay du Nord oil project offshore Canada for up to three years, due to concerns over surging costs, reported Reuters.

In recent months, the project has seen a significant rise in costs due to higher inflation across the world and the increasing prices of supplies, reported BNNBloomberg.

Equinor project development senior vice-president Trond Bokn was quoted by Reuters as saying: “Bay du Nord is an important project for Equinor. Within the context of the changing market with increased cost, we will now look at the project again to see if we can do further optimisations to our concept and strategies.”

As per the Newfoundland and Labrador’s offshore oil regulator, the Bay du Nord project is estimated to hold a total of 979 million barrels of recoverable oil across five discovery areas.

The areas include the Bay du Nord, Bay de Verde, Bay de Verde East and the Baccalieu fields located in the Flemish Pass Basin of the Atlantic Ocean.

Equinor had planned to produce the first oil by the late 2020s, and its 500 million barrels of recoverable reserves could last 20 years.

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Newfoundland and Labrador Premier Andrew Furey said: “The company has assured me that this is largely market forces at play and it’s not a cancellation.”

Equinor owns a 60% stake in the project, which was previously estimated to cost $11.97bn (C$16bn) while bp owns the remaining stake.

Environmental group Sierra Club Canada, which has raised concerns about the environmental impact of the Bay du Nord project, said it hoped the project would be cancelled by Equinor.