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A highly controversial oil project that Spain鈥檚 national government had pinned its hopes on was just cancelled. Spanish oil giant Repsol has decided to call off drilling near the Canary Islands, a small chain of Spanish-controlled islands off the coast of Morocco.

While oil companies across the globe are slashing capital expenditures and scrapping rigs because of low oil prices, Repsol鈥檚 divisive campaign to drill off the coast of Canary Islands suffered from a different problem. Despite what was being billed as potentially the largest oil discovery in Spanish history, Repsol reported聽highly disappointing results聽from its surveying.

Repsol spent more than a decade to get to this point. The plan to drill near the Canary Islands sparked聽angry protests聽from locals and environmentalists, bogging down drilling proposals for years. For example, in June 2014 150,000 to 200,000 people on the Canary Islands came out for a major protest against Repsol鈥檚 plans. The local government fiercely opposed any drilling over fears that it would spoil the islands鈥� tourism industry. Officials from the Canary Islands聽pushed for a referendum聽late last year, knowing that most islanders would vote down any effort to drill. (Related:聽By Buying Canada鈥檚 Talisman, Spain鈥檚 Repsol Nearly Doubles In Size)

But the Spanish central government had different ideas. Mired in a multi-year economic depression, with an聽unemployment rate聽still north of 23 percent, Spanish Prime Minister Mariano Rajoy pushed hard for oil exploration near the Canary Islands. Rajoy鈥檚 government gave Repsol聽final approval聽in August 2014.

Repsol stated that if initial drilling tests were successful, it would pour in聽$10 billion to develop offshore fields聽and would eventually be able to get oil聽production聽up to about 110,000 barrels per day, which would account for about 10 percent of Spain鈥檚 oil consumption.

But the Canary Islands no longer have to worry about Repsol鈥檚 presence. On January 16 the company cancelled all future drilling plans near the islands, saying that the disappointing results don鈥檛 justify further investment. 鈥淭he analysis of samples obtained showed the presence of gas鈥�but without the necessary volume nor quality to consider future extraction,鈥� the company聽said in a statement. 鈥淭he exploratory survey confirmed that oil and gas have been generated in the basin, although the deposits found have been saturated with water and the hydrocarbons present are in very thin, non-exploitable layers.鈥�

Repsol is closing up and will have to look elsewhere for growth. The company said that its drillship will depart from the Canary Islands and will head for Angola to search for oil.

What is interesting about the failed campaign in the Canary Islands is that it appears that low oil prices did not figure into the company鈥檚 decision. Rather than a temporary period in which Canary Island oil would be economically unviable due to low prices, the poor geological results mean that oil markets can essentially forget about the region becoming a viable source of production at any point in the foreseeable future. In other words, oil at $100 per barrel wouldn鈥檛 even allow Repsol to boost Spain鈥檚 oil output.

That comes as a huge blow to Rajoy, and dims Spain鈥檚 chances of reducing oil imports. Without any significant domestic oil and gas production to speak of 鈥撀爈ess聽than 50,000 barrels per day 鈥� Spain has to聽import聽about 80 percent of its energy.聽(Related:聽Unpopular European Fracking Could Provide Independence From Russia)

Meanwhile, Repsol recently聽purchased聽Talisman Energy, a Canadian firm, for $8.3 billion. The move will make Repsol one of the 15 largest oil companies in the world based on production and was聽the largest corporate transaction聽by any Spanish company in the last five years. But it will also decidedly transform Repsol into a company based in the Americas with 50 percent of its capital聽deployed聽in North America and 22 percent in Latin America.

The Spanish government is still holding out hopes that聽shale basins聽could spark an unconventional oil and gas boom, most notably in the Basque region. Several Spanish provinces have resisted, with Cantabria and La Rioja having passed bans on hydraulic fracturing. However, the Spanish Constitutional Court has shot down those moves, calling them unconstitutional.

The central government has pushed forward and has accelerated its rate of permitting for new exploration. The Canary Islands proved to be a big disappointment 鈥� whether or not the shale push is a bust as well remains to be seen.

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