Gisborne mayor Meng Foon says he hopes other oil companies will be warned off further deep-sea exploration in the region after the decision Petrobras to abandon its operations for commercial reasons.
The Brazilian oil giant was granted an exploration permit for the Raukumara Basin in 2010 and says preliminary results suggest it is not worth further investigation.
Mr Foon says he is relieved at the decision and hopes other companies will take note.
"Petrobras has done some intensive exploration research on that and for big companies to spend $5 million-odd and say there's not a lot - well, I don't think it'll come back."
Mr Foon says as well as being a risky venture financially for oil companies, drilling posed a massive environmental threat to his region.
He says the region had nothing to gain from the Petrobras operation, with any oil likely to be shipped straight out of Tauranga for processing overseas.
Iwi to continue legal action
An Eastern Bay of Plenty iwi opposed to deep-sea oil drilling on its doorstep says it plans to continue its legal battle, despite Petrobras's decision.
Te Whanau a Apanui lost its High Court bid to have Petrobras' permit overturned earlier this year.
Lawyer for the iwi, Dayle Takitimu, says it still plans to appeal. She says the Government's process for awarding the permit was flawed and the relationship between Maori and the Crown regarding the mineral estate needs to be clarified.
Ms Takitimu says Maori have serious fears about the environmental risk of deep sea exploration in the quake-prone Raukumara Basin.