Brazilian oil giant Petrobras is handing back its deep sea prospecting licence and pulling out of New Zealand after financial difficulties at home.
The company has announced plans to sell $US14.8 billion ($NZ18b) of assets, including all its refineries outside Brazil, this year due to rising costs and a fall in production.
It last week cancelled an order of five new drilling ships, and on Tuesday it was reported Petrobras was exiting New Zealand, where it has held an oil exploration permit for the Raukumara Basin since mid-2010.
Prime Minister John Key said the pullout was due to "local and domestic issues" Petrobras is dealing with.
"They are going through a bit of a regrouping phase and they're stepping back from what they're doing. I don't think it's got anything to do with the capacity to do the mining activity they were looking at undertaking," he said.
"They've got their domestic issues that they're having to deal with, and there are certainly plenty of other people who are interested so it's not a reflection on the capacity to either undertake deep sea drilling there or the prospective activity of that area."
Asked if it was a blow for New Zealand, Mr Key said he wouldn't put it in those terms.
"There's a long-term project and opportunity out there. There are plenty of other people looking at lots of other options in the Canterbury Basin and the like."
Mr Key was doubtful that court action against Petrobras' permit by Greenpeace and East Coast iwi Te Whanau a Apanui earlier this year played a part in the company's decision.
In July, the opposition groups lodged an appeal against a High Court decision upholding Petrobras' deep sea oil exploration licence, arguing that former energy minister Gerry Brownlee didn't account for environmental considerations in awarding the permit.
Petrobras' pullout comes just months after another major oil company, Anadarko, put its plans to drill off the Dunedin and Taranaki coasts this summer on hold, saying it needs specialised equipment because of New Zealand's sea conditions.