Oct. 30 (Bloomberg) -- Royal Dutch Shell Plc, Europe's largest oil producer, postponed an investment decision on expanding its Athabasca oil-sands project in Canada because of rising costs.

The company delayed a decision on the second-phase expansion indefinitely, having previously planned to make an announcement next year, Shell Chief Executive Officer Jeroen van der Veer told reporters today on a conference call.

``Later we can do the same or similar project as we have in mind for the second extension, but we can do it at a lower cost,'' Van der Veer said. ``Of course, you talk about billions of dollars'' in investment for such a venture.

The Hague-based Shell already operates the 155,000-barrel- a-day Scotford upgrader in Alberta, which converts bitumen extracted from oil sands into refinery-ready crude. The upgrader forms part of the Athabasca project, together with the nearby Muskeg River Mine, which supplies the bitumen.

Chevron Corp. and Marathon Oil Corp. are partners in Shell's Athabasca venture.

The delay to a second-phase investment decision ``doesn't stop us, obviously, to do some'' work on upgrading the existing mines, Chief Financial Officer Peter Voser said today on the call. The company is already building a second mine as part of phase one, he said.

Shell also said today that it's restarting a cogeneration unit at the Scotford upgrader, near Fort Saskatchewan, Alberta, about 23 miles (37 kilometers) northeast of Edmonton.

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Fred Pals in Amsterdam at fpals@bloomberg.net

Last Updated: October 30, 2008 09:17 EDT