RIO DE JANEIRO (Bloomberg) -- Brazil’s first auction of oil and natural gas exploration rights in two years got off to a weak start with three of the first four basins offered receiving no bids.

The sale of 266 exploration blocks began Wednesday amid a slump in crude prices, a national political crisis and with the country’s dominant producer, Petroleo Brasileiro SA, suffering cash constraints. While small and mid-sized producers prefer to join Petrobras as minority partners to limit risk, the company is balking at new financial commitments, according to Jotavio Gomes, an oil consultant and former employee at the state-run firm. Petrobras hadn’t placed any bids as of 11:18 a.m. in Rio de Janeiro.

The country is facing many of the same headwinds that hindered two oil auctions earlier this year in Mexico. Crude prices have slumped almost 50% in the past year and companies from ConocoPhillips to Royal Dutch Shell Plc are slashing investments. State-controlled Petrobras, a bidder in previous auctions, has cut investments twice this year in an attempt to reduce the largest debt load in the industry.

“Petrobras isn’t participating,” Gomes said in an interview. “You don’t see anyone from Petrobras here. In my opinion this won’t go very well.”

Brazil sold half of the blocks offered in the Paraniba basin, which holds natural gas discoveries. The next three basins received no bids at all, according to the National Petroleum Agency.

“The scenario is very uncertain, there are no estimates” for how many blocks will be sold, Oil and Gas Secretary Marco Antonio Almeida told reporters Wednesday ahead of the auction.

Foreign Operators

Both onshore and offshore areas are up for grabs, including deepwater blocks in the Sergipe-Alagoas basin off the country’s northeastern coast, where Petrobras has made a series of discoveries in recent years. Brazil is seeking to lure more foreign operators to foster competition and bolster its flagging oil-services and naval industries. Petrobras accounts for more than 90% of the country’s oil production.

“The environment is not very encouraging,” Jorge Camargo, president of the Brazilian Institute of Petroleum, an industry group that represents foreign and domestic producers, told reporters Tuesday. “But this is an industry that thinks long term -- five, 10 years ahead. We are hoping the round is a successful one.”

Besides Petrobras, 35 companies are registered to bid, including Exxon Mobil Corp., Shell, BP Plc, Statoil ASA and Total SA.