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Brazilian oil company Petrobras will hand back exploration licences it holds for deep sea oil and gas prospects in the Raukumara Basin, off East Cape, in what appears a reaction to a string of difficulties which have seen the global oil company report losses for the first time in 13 years.
Prime Minister John Key told the New Zealand Herald that the decision was "not a reflection on the capacity to undertake deep-sea drilling or the prospect of activity of that area".
The Raukumara Basin lies in very deep water off the east coast of the North Island and has barely been explored.
Petrobras contracted a seismic survey ship to undertake initial surveys of parts of the basin early last year, where it encountered stiff opposition from a protest flotilla organised by Greenpeace and a local Maori tribe, Te Whanau a Apanui.
The New Zealand Navy was despatched to ensure the seismic survey could continue.
Petrobras has had what the Financial Times newspaper described early last month as an "annus horribilis", reporting its first quarterly loss in 13 years in the second quarter, disappointing investors in the third quarter and facing a 40% plunge in its share price over the year.
Among its difficulties have been falling production, foreign currency losses caused by the need to import fuel because of a lack of refining capacity in Brazil, government interference and most recently an order to pay back taxes of $U$2.4 billion dating back a decade and relating to offshore activities.
Mr Key said he understood Petrobras was "going through a bit of a regrouping phase and they're stepping back from what they're doing. I don't think it has got anything to do with the capacity to do the mining activity they were looking at undertaking".
"I think it's the context of their local and domestic issues they're dealing with" and should not be seen as a blow to the government's agenda for accelerating economic growth through oil and gas discoveries.
"I wouldn't really put it in those terms. That'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 did not believe the court challenge from Greenpeace or Te Whanau a Apanui played any role in the decision.