A joint venture has applied to surrender a permit to explore the Kaheru area off the Taranaki coast.
New Zealand Oil & Gas, Tag Oil and Beach Energy say the current conditions don't support drilling, which would have to start in May.
Wellington-based NZOG, which holds 35 percent, has said previously the area is not economically viable.
Tag owns 40 percent and Beach 25 percent.
With oil prices falling to the $US30 a barrel range, NZOG says it's putting greater emphasis on keeping exploration costs at a minimum.
Last year's slump in oil prices resulted in a smaller uptake in new petroleum licences.
However, the government last week announced five block offers for oil and gas exploration permits - including one onshore in Taranaki.
The others - Northland, Taranaki, Pegasus and East Coast Basins - were offshore.