European oil giants BP and Royal Dutch Shell are deferring their investments in bio-fuel projects by holding a consolidated investment of about $57m during the first quarter of 2013.

Industry sources claim that the current quarter witnessed the lowest investment for bio-fuel production since 2006.

Meanwhile, the sector has registered highest investment during the last quarter of 2007 with $7.6bn put in for bio-fuel production.

The companies have cited uneconomical technology for the renewable fuel production as the reason to terminate its plans.

BP biofuels program head Phil New told Bloomberg that the processes were very cost intensive and large-scale engineering was involved.

"It will take time for scale-up," added New.

The decision follows a recent announcement by the company to invest $350m to increase its Tropical ethanol project capacity in Brazil.

Shell alternative energy head Matthew Tipper was quoted by Bloomberg as saying, "All of these technologies are capable of working technically.

"It was purely on cost that this technology couldn’t be taken forward. Fuels have to be cheap enough to burn. Otherwise no-one will buy them."