A spokesperson for the project said that a final investment decision on the Pembrokshire-based project will be deferred and construction put on hold.
The project, led by Qatar Petroleum International Global Ventures, ExxonMobil Power and Elf Petroleum, was envisaged to use the heat produced by the LNG terminal to meet its power demand or export surplus power to the grid.
Qatar Petroleum International chief executive Nasser Al Jaidah said the decision was “difficult” but “reflects the fact that in the light of today’s market conditions all discretionary major investments have to be rigorously appraised”.
“The decision is in no way a reflection on the attractiveness of the South Hook CHP Project itself, the UK as a place to invest,” Al Jaidah added.
Utilities analysts at RBC Capital said heavily suppressed energy market prices across Europe means “it would be unsurprising if further projects were mothballed”.