In the wake of the oil spill in the Gulf of Mexico, the energy giant looks to avoid further controversy.
BP will not bid on an exploration license for natural resources in Greenland.
The move comes after another energy firm claims to have discovered gas off Greenland's coast.
BP has scrapped plans to drill in the Arctic, where a new oil rush is expected, amid fears such a move would be "political madness" after the Gulf oil spill, Britain's Guardian daily said Thursday.
The energy giant said it was no longer planning to try and win an exploration license in Greenland, it said.
"We are not participating in the bid round," a spokesman for the British firm told the paper without giving details on why the decision was taken.
BP's decision came after Scottish exploration group Cairn Energy revealed Tuesday it had discovered gas off Greenland's coast and said there may be other hydrocarbon resources in the region..
The news fueled expectations of a new oil rush, but also sparked concerns among environmental campaigners over the effect of energy firms targeting the area, which is home to blue whales, polar bears and seals.
Greenpeace activists have traveled to the Arctic on board one of their ships to pressure Cairn into stopping its operations in the area.
The bureau of minerals and petroleum in Greenland's capital Nuuk said the names of successful bidders for exploration licenses will be announced in the next couple of weeks, according to the Guardian.
Senior sources told the paper that the Greenland government and BP had agreed it would be a bad idea for the company to be involved.
"With the Greenpeace ship already harassing Cairn off Greenland -- a company which has an exemplary safety record -- everyone realized it would be political madness to give the green light to BP," one source said.
The Gulf of Mexico oil spill, which started in April with the sinking of the Deepwater Horizon rig, unleashed millions of barrels of oil and caused massive environmental damage.
BP managed to stop oil gushing from the ruptured well last month, but its image has taken a battering and the British firm is facing clean-up and compensation costs running into tens of billions of dollars.