Brazilian oil giant Petrobras has pulled out of New Zealand, Prime Minister John Key has confirmed.
The state-run energy company has handed back its prospecting licences, he said.
The world's third-biggest oil company with sales of close to $150 billion a year, Petrobras had planned to invest $300m over the next three years in exploration and production.
Key denies the pull-out has anything to do with Greenpeace and Te Whanau a Apanui protests at plans for deep-sea drilling off the East Coast.
"They are going through a bit of a regrouping phase and stepping back from what they are doing. I don't think its got anything to do with the capacity to do the mining activity they were looking at undertaking," Key said.
Petrobras is struggling with rising inflation in Brazil and is having to import gasoline to meet demand because it lacks refinery capacity.
It is reported to be considering selling off assets in Africa and the US and recently withdrew from a huge ethanol pipeline project.
The news is a blow to the Government's aim to grow the oil and gas sector. In August, Texan oil company Anadarko announced delays to their plans to deep-sea drill off the coast until summer 2013.
Earlier this year, the joint Greenpeace-iwi bid to quash the East Coast exploration permit was thrown out by the High Court.
Finance minister Bill English shrugged off the loss - saying other companies are interested.
"There's others who are interested ... The Government has invested a bit of time and money making sure that oil and gas exploration is attractive.
"The companies are always making their decisions in terms of quite big shifts in world energy markets with the extensive shale gas finds in the US for instance."
He admitted New Zealand's oil and gas reserves are a "challenge" to get to.
"It's not as easy as some other resources around the world, but their decisions will be affected as much by world energy markets as by anything about New Zealand."
- © Fairfax NZ News
What do you think of the proposed alcohol policy?Related story: Push to close bars at 2am