"I wouldn't really put it in those terms," he said. "That is 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 likes."
Petrobras is one of the biggest oil companies in the world but has struck problems in its home waters where delays in deep-sea fields have hit revenue and is struggling to supply high domestic demand profitably.
Key said it was possible Petrobras may come back again but he understood the company was consolidating.
The Petroleum Exploration and Production Association's chief executive David Robinson said the decision was "disappointing" but it was clear it was balancing its investment portfolios.
Seismic work didn't justify continuing with frontier exploration. Petrobras would have spent $150 million on the work programme through to drilling.
"It would have been good to have them here and keep investing, it would have been good to have found something and if they're not here they're not going to find anything," he said.
"But you've got to be realistic - it's a frontier basin and oil and gas is hard to find."
The withdrawal has been welcomed by Greenpeace which with East Cape iwi Te Whanau a Apanui and other groups staged protests against Petrobras.
"The likelihood of oil from a deep sea blowout washing on to the beautiful beaches and coastline of the East Cape and Bay of Plenty just went down by 100 per cent," said Greenpeace climate campaigner Simon Boxer.
The Ministry of Business Innovation and Employment said the Raukumara Basin was considered to hold high potential for oil and gas development, and was an important frontier basin for future oil and gas exploration activity.
"The work Petrobras has done has added to the information regarding the potential for oil and gas projects in the region and will be freely available for other companies wanting to explore," said the ministry's director of petroleum Kevin Rolens.
