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Important Step towards Icelandic Oil Exploration

Today, the National Energy Authority of Iceland (NEA) finished processing two applications for licences for exploration and production of hydrocarbons in the Dreki Area, Northwest of Iceland.

Iceland-Oil-Exploration_Faroe-Petroleum-Valiant-Petroleum-litud-areas-DrekiFor the last six months NEA has been evaluating of the technical and geological and financial capacity of the three applicants that handed in their applications earlier this year (2012). According to Icelandic law, the applicants must be able to handle extensive activities and have sufficient financial strength to conduct the activities for the long-term and handle the corresponding environmental and safety elements.

Following this evaluation, the NEA has made a decision to grant two licences. One to Faroe Petroleum Norge and Iceland Petroleum, and other to Valiant Petroleum and Kolvetni. Furthermore, the Norwegian Ministry of Petroleum and Energy has notified the NEA of their decision to participate in both licences to a 25 per cent share, in accordance with an agreement between Iceland and Norway from 1981.

The areas covered by the two licenses are shown on the map above. Areas awarded to Valiant Petroleum and Kolvetni are marked with blue color. Areas awarded to Faroe Petroleum Norge and Iceland Petroleum are marked with red.

Dreki-Area-hydrocarbon-licenses-mapHowever, the licences will not by issued until the Norwegian Parliament has approved the decision on the participation by Norway through the State-owned fund Statens direkte økonomiske engasjement (the State’s Direct Financial Interest or SDFI), administrated by the Norwegian firm Petoro. Following this and the signing of the parties to the licences of their joint operating agreements, NEA will grant the licences. This is expected to take place in early next year (2013).

We will soon be offering more information about hydrocarbon activities on the Icelandic continental shelf on our special petroleum pages.