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Two Companies Halt Oil Exploration in Icelandic Waters

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Two Companies Halt Oil Exploration in Icelandic Waters

Oil drilling platform

Photo: Wikipedia.

Chinese oil company CNOOC and Norwegian oil company Petroro have relinquished their licenses for oil exploration in the so-called “Dragon Zone,” a region in Icelandic waters, RÚV reports. It will be decided within the next few weeks whether Icelandic company Eykon will continue its activity in the region.

Oil exploration licenses were first granted for the area five years ago. The first license was relinquished by the end of 2014 and the second at the beginning of last year. The third and final license was granted for a period of 12 years and covered a larger area than the first two, a total of 6,300 square kilometres (2,400 square miles) in the Dragon Zone. The geological condition in the area were considered different from the first two. The first phase of the work program is now complete and license holders were required to inform the government by today whether they would be continuing research, or relinquishing their license.

Eykon Energy ehf., which is a subsidiary of Eykon AS in Norway, holds a 15 percent share in the third Icelandic license. CNOOC held 60 percent and Petoro held 25 percent. In view of the available data on the geology of the area and other factors, such as research costs, the two latter companies have decided to return their share of the license. As a result, they waive their rights for concessions for oil processing in the area and also their obligations for further oil exploration and research.

“The Icelandic company Eykon is the last one remaining which raises the question whether they have the resources to continue with the license alone, and it is the opinion of the National Energy Authority that they do not,” says Skúli Thoroddsen, the organization’s lawyer.

Eykon have requested the National Energy Authority grant them the opportunity to discuss the possibility of getting some other parties to share the license. “That is a legal question,” says Skúli. It is the opinion of the National Energy Authority that Eykon has neither the financial nor technical capacity to stand alone as a license holder. Eykon has been informed of this by the National Energy Authority, and has until February 15 to respond. “I’m not going to make any rulings here and now, depending on their point of view, what the decision of the National Energy Authority will look like after February 15th,” Skúli stated.

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