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From The Wall Street Journal

SÃO PAULO—The Brazilian government’s auction of exploratory oil blocks met with little demand on Wednesday, with no bids from state oil company Petróleo Brasileiro SA, as the low price of oil and local content-rules weighed on interest.

Brazil’s National Petroleum Agency, or ANP, raised only 121 million reais ($31.4 million). The minimum required bids on all the blocks up for sale totaled 979 million reais.

ANP sold only 37 of the 266 blocks on offer. None of the parcels is located in Brazil’s oil-rich pre-salt, an offshore area in which oil is located under salt deposits deep beneath the sea.

The outcome of the auction wasn’t surprising, given current conditions in world oil markets and the rules of the auction, said Adriano Pires, director of Rio-based consultancy Brazilian Infrastructure Center.

“There’s an abundance of oil in the world, and revenue [at the big oil companies] has fallen a lot,” he said. “The government and the ANP didn’t change any of the rules from earlier auctions, for example the one regarding local content, and that reduced the interest of the big companies.”

The ANP requires winning bidders to buy a certain amount of equipment from Brazilian providers. Oil companies have complained that the level of required local content is too high.

The absence of bids from Petrobras, as the state oil company is known, is a reflection of the challenging scenario it faces, including the low price of oil, its high debt and a corruption investigation that has halted much of its investment program.

“Petrobras is a traditional leader of those auctions in Brazil, and the lack of interest of the company hurt the final results of this auction,” Mr. Pires said.

Petrobras said in a note that the blocks on offer weren’t attractive enough to merit a bid, and that the company is cutting back on investment as it tries to reduce its debt and improve its profitability.

A total of 37 companies from 17 countries registered for the auction, including big names like Exxon Mobil Corp., BP PLC, Cnooc Ltd., Royal Dutch Shell PLC, Statoil ASA, Rosneft and Total.

Only 17 companies, from seven countries including Brazil, bid on any of the blocks and 11 of the winning companies were Brazilian. The Brazilian unit of France’s GDF Suez SA bid on eight blocks and won six, the ANP said.