"The contract has been cancelled due to delays and the inability to deliver, and we have seen that the war has increased these risks," Fennovoima chairman of the board Esa Harmala told reporters at a press conference.

Rosatom said it was surprised by the announcement.

"The reasons for such a decision are completely incomprehensible," the group said in a statement, adding that the project had been "progressing" and Fennovoima's management had not discussed the termination of the contract with shareholders.

Rosatom said it might take the matter to court.

"We reserve the right to defend our interests in accordance with the current contracts and current law", the firm stated.

The proposed 1,200-megawatt Russian-designed reactor was to be built in Pyhajoki, about 100 kilometres (60 miles) from the port of Oulu in northern Finland.

The Hanhikivi 1 project, in which Rosatom owns a 34-percent stake with the remainder held by a Finnish consortium, had been delayed several times and the construction permit had not yet been granted.

Construction was to have begun in 2023 and electricity production in 2029.

Fennovoima, which had already poured 600-700 million euros into the project, said issues with the delivery had accumulated "years before" and the contract was not terminated solely because of the war.

It was not immediately known whether the Finnish consortium would completely scrap its plans to build a new reactor, or seek out a new partner to replace Rosatom.

"It is too early to speculate on the future of the project", Harmala told reporters.

"This decision does not have a direct impact on the shareholder agreement between the owners of Fennovoima."

However, Fennovoima chief executive Joachim Specht added it was "too early" to comment on whether Rosatom would stay on as an owner in Fennovoima.

- 'Significant complexities' -

The project, which employed 450 people, had been one of the major industrial projects involving a Russian company in the European Union, though there had been many uncertainties about its future.

Two days before Russia's invasion of Ukraine, the Finnish government had said it was re-evaluating the security risks for the 7.5-billion-euro deal.

Russian nuclear power groups are currently not subjected to European sanctions over the Ukraine war.

Nevertheless, Fennovoima had said in early April it expected the existing sanctions to have an effect on the project.

Harmala stressed on Monday that "we were not pressured in any way".

Fennovoima said the decision to cancel the contract was "not made lightly".

"In a such a large project there are significant complexities and decisions are made only after thorough considerations", it said in a statement.

Finland currently has five nuclear reactors at two plants, both located on the shores of the Baltic Sea, providing about 30 percent of the country's electricity.

The fifth reactor, Olkiluoto 3 built by the French-German consortium Areva-Siemens, went online in March and will provide 15 percent of Finland's electricity when it begins producing at full capacity in September.