Equinor's decision to scrap its proposed drilling in the Great Australian Bight has come as a shock to supporters and critics alike.

Key points: Equinor said its exploration plan was "not commercially competitive"

An energy consultancy says many companies in Europe are moving away from oil

An industry expert says he's not sure if other companies will show interest in the project

The decision was revealed just weeks after the Norwegian oil company was granted environmental approval by the national offshore petroleum regulator — a key milestone that would have allowed exploration drilling to begin within months.

The company has not commented on how much it spent to get to this point, but has insisted it is a purely commercial decision, and unrelated to widespread environmental opposition.

"It's just too expensive … the cost for these activities is just too high to go ahead," Equinor's Australian chief, Jone Stangeland, said.

"The main procurement activities included the rig, the helicopters and also the supply base activities.

"We met with federal and state politicians yesterday. They were disappointed and we can understand why they are disappointed. At the same time, they also recognised that this is a commercial decision."

However, energy analysts are pointing to other factors which may have contributed to that decision — including climate change.

How did Equinor get to this?

Drilling in the bight has been consistently opposed since it was proposed — not by Equinor, nor Chevron, but by BP all the way back in 2011.

Concerns were raised about a possible disaster, like the Gulf of Mexico oil spill in 2010.

The Deepwater Horizon spill is considered the worst in US history. ( Carlos Barria: Reuters )

The blowout at the Deepwater Horizon drilling rig killed 11 people and spilled 4.2 million barrels of oil into the gulf — the worst offshore environmental disaster in US history.

Equinor, which has seven staff currently in Australia, said it would have taken between 40 and 60 days to carry out drilling almost 400 kilometres offshore.

"[Today's decision] is not related to the distance from shore," Mr Stangeland said.

Despite his company's decision, Mr Stangeland said Equinor had done good work and he remained optimistic about the likelihood of future exploration in the area.

"This could open up a new province, a new area for oil and gas in South Australia," he said.

Has climate change been a factor?

Equinor is also two-thirds owned by the Norwegian Government.

Last year, it was widely reported that Norway's sovereign wealth fund was given the green light to begin selling off oil and gas stocks worth $US5.9 billion.

Energy consultancy EnergyQuest said Europe was moving away from oil.

"In our view, the decision is likely to have been driven by stronger carbon reduction targets of the European oil companies," chief executive officer Dr Graeme Bethune said.

"Carbon costs are starting to bite and the European companies appear to be setting higher hurdles for oil projects."

Equinor had launched plans to drill in the Great Australian Bight. ( Supplied: Bill Griffiths )

Dr Bethune said Equinor had announced earlier this month it was working towards a 50 per cent cut in net carbon intensity by 2050.

He said fossil fuel companies were increasingly getting into renewable energy.

"For example, OMV sold out of Tui in NZ in the past quarter because it said it was shifting away from oil," he said.

"Repsol in December announced a US$5.3 billion write down, reflecting lower values it sees for oil and gas, and said it would redirect investment into renewables.

"It has set a net zero target by 2050, and BP has since followed.

"Repsol didn't appear to single out oil, but the logical conclusion is oil would be at the top of the reject list because of its higher carbon intensity."

He said this was another example of European influence on investments around the world.

Could anyone take up the drilling plan?

In 2007, Equinor began strategic cooperation with state-owned giant China National Petroleum Corporation but Dr Bethune would not speculate on whether China was more likely to show an interest in the bight.

"At this stage, particularly with a low oil price, I don't think there'd be immediate interest from other companies," Dr Bethune said.

"Anything that does get taken up is subject to NOPSEMA [National Offshore Petroleum Safety and Environmental Management Authority] but I think it's a pity that a company of Equinor's standing has pulled out."

The Australian Petroleum Production and Exploration Association (APPEA) said it was not yet clear if another company would take up the mantle.

There were many protests against deep sea oil drilling in the Great Australian Bight. ( ABC Open contributor fougyoum )

"We know the oil and gas resources are there, but what we don't know is the commercial viability of producing them," director Matthew Doman said.

"There are other companies that retain interest in the Great Australian Bight, they are much less advanced with their plans than Equinor were, so this is clearly a setback … and we'll have to wait and see what the longer-term plans of other companies might be."

He said there was clearly a "concerted campaign" against drilling activity in the Great Australian Bight.

"We accept there are people who oppose them, we accept that there's a range of genuine questions and concerns … but I think the public discussion of it could have been more reasonable," he said.

How has Port Lincoln reacted?

Port Lincoln is at the tip of South Australia's Eyre Peninsula and is one of the coastal communities which would have been closest to Equinor's planned drilling.

Local resident, and Fight for the Bight member, Matthew Dodd said he was "ecstatic" Equinor had backed down.

"When Equinor got their environmental approval, it all seemed a little bit hopeless at the time but hearing that news this morning was just unreal," he said.

"The risk-versus-reward factor for local business, the local economy, just wasn't there.

"The risk was all on us and the reward was all going to a foreign-owned company."

A Port Lincoln local says she was excited to hear drilling plans had been abandoned. ( Supplied: Richard Robinson/Greenpeace )

Lisa Kuerschner is a primary school teacher from the area and said she also opposed the drilling.

She said she was pleased with the decision and it was not worth the risk.

"Stoked. I was really excited to get the news," she said.

"I was at school when the message came through.

"I did a lot of work last year with my year sixes … we looked at both sides of the story.

"Mostly we came to the conclusion it's just not worth the risk.

"School students see things in a pretty straightforward way."