It’s not time for Iceland to “bet on oil”, as they seem to be doing after granting three oil licenses for the Drekasvæði (Icelandic Jan Mayen area), where “there are few indications” that production will be profitable, says Árni Finnsson of the Iceland Nature Conservation Association (Náttúruverndarsamtök Íslands) to AFP. Árni’s and other local environmental organisations had shown their opposition to Jan Mayen exploration earlier, for example with a demonstration just after Chinese major CNOOC got the third of the licenses some six weeks ago.
Eykon Energy, CNOOC’s local partner in the Jan Mayen license, would surely differ with Árni’s assessment of the prospects for oil exploration in the area. They’ve been talking about reserves of up to 1bn barrels of oil equivalent, some twenty times what the Norwegian petroleum directorate estimates is to be found down there.
Chinese oil major CNOOC has finally got an E&P license (expected already last October) in the Dreki area, the Icelandic sector of the waters south of the Norwegian island of Jan Mayen. CNOOC, through an Icelandic subsidiary, is to be the operator of the license, and to control a 60% share of it. They’re partnering with Norway’s state-owned Petoro AS, with a 25% share, and Eykon Energy, a local company.
I wrote about Dreki oil in some length in September (today’s announcement was ‘imminent’ back then), and more briefly in some recent updates.
Norwegian energy and oil minister Tord Lien responded to criticism regarding Norway’s decision to partner with Chinese state-owned CNOOC to explore for oil in the Icelandic sector of the Jan Mayen area (Drekisvæði for the Icelanders), while suspending drilling on the Norwegian sector, dubbed a case of “double standards” by Greenpeace: “If they have more confidence in the Chinese state-owned company than in the Norwegian state-owned company when it comes to environmental issues, then I think that’s a bit surprising.” Norway’s participation won’t lead to any “more or less oil activity” off Iceland, said Lien, while from an environmental point of view it’s a good thing to have Norway’s Petoro work together with the Chinese operator, and it makes economic sense to have access to information to be gathered from exploration activities, the first ever in the high-potential Jan Mayen area, at a “relatively marginal cost” ($4m last time I checked). All of the above from Aftenbladet. More about CNOOC in Iceland in my article and subsequent posts on the topic.
Iceland’s National Energy Authority (NEA) is done processing the application for an E&P license in the Dreki Area presented by Chinese state-owned oil giant CNOOC and Eykon Energy, an Icelandic company established last year. The Dreki Area is the Icelandic half of the region that surrounds the Norwegian island of Jan Mayen, and a 1981 treaty gives each country the right to a 25% share in any oil drilling licenses awarded in the other’s sector. The Norwegians did take up a stake in the two licenses awarded so far by Iceland, but it’s less clear if they would do so this time, just after the new government there has suspended exploration plans in the Norwegian sector. Norway has now a month to decide if they want a share. By mid November, CNOOC will then be the biggest oil company with an interest in Icelandic oil. The other two are Ithaca Energy and Faroe Petroleum, 23% of which is (for the time being) owned by Korean major KNOC. I’ve written about this topic in some length.
Posted on Tumblr on Oct 2.
The NYT quotes Þórarinn Arnarson from the Icelandic National Energy Authority (NEA) as expecting CNOOC and Eykon Energy’s application to drill in the Dreki area to be approved “by the end of the year”. Not two months ago, Vísir‘s sources thought it likely for the approval to come in October. The Dreki area is under continental waters between Iceland and the Norwegian island of Jan Mayen. I’ve written about the project, a first for both Iceland and CNOOC.