Brazil, which is caught in a vicious recessionary spiral which is only set to get much worse before it gets better, tried to obtain some much needed cash when earlier today it conducted an auction to sell exploration rights for of its oil and gas. It was, in short, a disaster.

According to Reuters, by midday Brazil had only sold 17 of 119 blocks offered. Companies made no bids at all for blocks offered in four of six basins, including areas in the prolific Campos Basin, Brazil's top producing region, and the offshore Camamu-Almada and Espirito Santo basins. Worse, the auction sold just 2 of the 10 blocks for sale in the Sergipe-Alagaos basin, which had been expected to be one of the most fiercely contested. The winning bidders had no competition.

Traditionally, a key bidder for such rights has been Brazil's state-run energy giant, Petrobras, which however as a result of an ongoing giant price-fixing, bribery and political kickback scandal, has so far not bid for any blocks. With $130 billion in debt and a backlog of existing projects, Petrobras has not said if it will bid. In all previous auctions Petrobras, alone or in a group, was responsible for at least half of sales. Not this time.

A total of 36 companies from 17 countries - including Petrobras, ExxonMobil Corp, BP Plc and Royal Dutch Shell Plc - registered for the auction. None of the majors have bid so far. Only a handful of sold blocks were even contested.

The locals are not happy: "The feeling is one of frustration," Aluizio Dos Santos, mayor of Campos, Brazil and president of the Organization of Oil Producing Municipalities, said on the sidelines of the auction in Rio de Janeiro.

"It has been worse than we expected," said a senior official at Brazil's ANP petroleum regulator, which is running the auction. 

As Reuters adds on Tuesday Delcídio Amaral, a senator from Rousseff's ruling Workers' Party said the auction would be a litmus test for Brazil's oil industry. In which case one can't help but wonder just how much worse it will get not only for Brazil's economy, but for the price of oil: after all if the majors did expect a rebound in oil prices, they would be the first to snap up exploration rights on the cheap.

This time none of them have bid.

The irony is that one of the catalysts for yesterdays remarkable surge in the price of oil was industry executives warning of a "dramatic" decline in U.S. output that could lead to a price spike. However, when it came to putting their money where their mouth was just 24 hours later, not a single one of them stepped up!