Several oil majors are expected to bid for licenses offshore Greenland's west coast. One month ahead of the closing for bids, industry sources say that Shell and TotalFinaElf have strong interests in the arctic island, which including the Canadian waters in Davis Strait is seen holding oil reserves equivalent to the North Sea. Conoco and a couple of mid-sized companies are also named as likely bidders.
Greenland will grant new exploration licenses by the end of 2002 in a second licensing round after a failed attempt 10 years ago, hoping that future oil finds will make the island less dependent on the fishing industry and grants from the Danish state, under which it enjoys limited home rule.
"From what we know now, the regional geology allows the possibility of significant oil and gas accumulations," said Donald Gautier at U.S. Geological Survey. Exploration in the waters off the world's largest island is an expensive and complicated task due to the arctic climate and extreme water depths. But myths of the danger of floating icebergs are exaggerated, experts say. In 2000, 60 icebergs were towed away from a security zone around a drilling vessel, causing a one-day delay, while other technical problems postponed the drilling by 26 days.
Oil exploration in Greenland started in the 1970s and so far seven wells have been drilled compared to more than 3,000 in the North Sea. Two have proved the presence of hydrocarbons.
"We scent a broad interest among oil companies. People call and ask technical questions, but we do not dare to guess about the number of applications," said head of Greenland's bureau of minerals and petroleum, Hans Kristian Schoenwandt. Greenland's coming three to five year oil strategy is expected to be concluded early next year and will be based on the outcome of the licensing round. Statoil and Phillips are still looking at Greenland despite recent dry holes on Greenland's offshore Fylla and Sisimiut licenses, which were returned earlier this year. "Greenland is still interesting, but at present our plate is full," Statoil spokesman Kaj Nielsen said. Phillips, planning to merge with Conoco Oil later this year, declined to comment. BHP Billiton and Agip could join the party later. "It's still too speculative. A longer-term interest can quickly become an immediate interest," said spokesman Patrick Cassidy at BHP Billiton. "We expect that some companies will apply for two or three blocks. It would be possible for us to go in afterwards if one of the companies wants to reduce their stake," said a company spokesman at Agip. Greenland is offering licenses in the area between latitudes 63 and 68 degrees north of the island's west coast and the deadline for applications is July 16.
The choice of the city of Helsinki is not incidental as the capital of Finland had hosted US-Soviet negotiations on the limitation of nuclear stockpiles in 1969