BP has announced it will not proceed with plans for exploration drilling in the Great Australian Bight, offshore South Australia.

Key points: BP abandons exploration drilling plans, saying it will focus on medium-term projects

BP abandons exploration drilling plans, saying it will focus on medium-term projects The SA Government says Australians should feel disappointed by the decision

The SA Government says Australians should feel disappointed by the decision Environmentalists say the withdrawal is a win for the community

In a statement, BP said it would instead focus on projects it can exploit in the short-to-medium term.

BP had been awaiting environmental approval to begin exploration drilling for two wells off South Australia's west coast about 400 kilometres south-west of Ceduna.

Its previous environment plan for the region had been knocked back twice by the National Offshore Petroleum Safety and Environment Management Authority (NOPSEMA).

Exploration and production managing director Claire Fitzpatrick said the decision was not related to the potential for oil in the region or the pending decision by an independent federal regulator.

"We have looked long and hard at our exploration plans for the Great Australian Bight, but in the current external environment, we will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals," she said.

Ms Fitzpatrick said significant progress had been made to prepare for drilling in the Bight with the support of the community, and federal, state and local governments.

"This decision has been incredibly difficult and we acknowledge it will be felt across the South Australian region," she said.

"We acknowledge our commitments and obligations and our priority now is to work with government and community stakeholders to identify alternative ways of honouring these."

She said BP had informed the federal and South Australian governments of its decision.

The deep sea oil rig bound for the bight from Korea has now been docked in Singapore.

BP has let down Australians: SA Treasurer

BP was awarded exploration licences for four blocks in the Ceduna area of the Bight in January 2011.

Other companies including Chevron and Santos are still seeking to explore for oil in the Bight.

A Chevron Australia spokesperson said the company was continuing to progress its work program associated with the Great Australia Bight.

"As we do with all our business activities, we work closely with government regulators and stakeholders to ensure any proposed work is completed under the appropriate environmental conditions," they said in a statement.

SA Treasurer Tom Koutsantonis said BP had let the community down.

"Every Australian has the right to feel disappointed by BP," he said.

"They made a promise to the South Australian Government that they would spend nearly $1.4 billion on exploration of the Great Australian Bight when they tended for these tenements and now they've withdrawn.

"I think they have done a bit of damage to their brand."

Opposition Leader Steven Marshall said BP's decision was reminiscent of the one made by BHP Billiton when it decided not to proceed with a planned massive expansion of the Olympic Dam mine.

"My point is not that Labor are to blame, I'm lamenting the point that this is another project which the Government has spruiked for a long period of time which is unfortunately going south," he said.

"It's not going to occur — and in a state which is really at rock bottom in terms of economic growth, we need projects like this."

Ceduna Mayor Allan Suter said he was shocked by BP's decision.

He said the community would have gained a lot from the exploration had it gone ahead, including 36 workers based in Ceduna during the drilling campaign.

"We didn't see it coming. I don't think anybody locally saw it coming," he said.

"The decision was made overseas on commercial grounds, it was very sudden after a lot of money had been spent. So a bit of a surprise to everybody I think."

Withdrawal a 'win for the community'

South Australian Greens senator Sarah Hanson-Young said BP had known its project was deeply unpopular in the SA community.

"This is a great win for the community who made it clear that BP weren't welcome from the beginning," she said.

Wilderness Society national director Lyndon Schneiders said all oil and gas companies should follow BP's lead and leave the Great Australian Bight.

Protesters line the shore at Victor Harbor in August to oppose BP's drilling plans. ( ABC News: Nicola Gage )

"If BP with all its experience cannot produce an acceptable drilling plan for NOPSEMA, the remaining companies exploring in the Bight will be wasting their shareholders' money trying to pursue this folly," Mr Schneiders said.

BP's announcement came within about an hour of a Kangaroo Island Council decision to reinforce its opposition to the drilling.

Mayor Peter Clements said it was an important day for South Australian tourism, which he said had far greater economic potential than oil and gas.

"I'm ecstatic. We led the charge actually many years ago when they started exploring out there from the point of view that there is no precedent for that type of drilling from a safety point of view anywhere in the world."