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Norway to participate in the third licence

22.11.2013

Norway has decided that Petoro, the state oil company of Norway, will participate in a 25 % share of the third licence for exploration and production in the Dreki Area.

Petoro Iceland AS will participate in the licence along with the Chinese oil company CNOOC International Ltd and Eykon Energy ehf, according to a letter received by Orkustofnun today, 22 November.

The Norwegian Parliament, Stortinget, must approve of the decision on the participation by the Kingdom of Norway through the State-owned oil company Petoro Iceland AS prior to the granting of the licence. Following this and the signing of the parties to the licence of their joint operating agreements, Orkustofnun will grant the licence, probably around the end of the year.

Orkustofnun finished processing the third application received in the second licensing round in the Dreki Area by Eykon Energy ehf. and the Chinese oil company CNOOC International Ltd in October. Orkustofnun had previously sought the opinions of the Ministry for the Environment [now: Ministry for the Environment and Natural Resources] and the Ministry of Fisheries and Agriculture [now: Ministry of Industries and Innovations] in accordance with legal requirements and evaluated the opinions based on the applications and the work programmes involved.

Furthermore, Orkustofnun made a careful evaluation of the technical and geological capacity of the applicants to handle the extensive activities associated with the licence.  Finally, Orkustofnun studied the financial capacity of the applicants in order to ensure that the applicants have sufficient financial strength to conduct the activities for the long-term and can handle the corresponding environmental and safety elements. Orkustofnun found that the applicants jointly fulfilled the requirements.

As a result of the processing the application, Orkustofnun made a decision to grant a licence to CNOOC International Ltd and Eykon Energy ehf. Furthermore, the Norwegian authorities were notified of the decision, a draft licence sent for their perusal and a formal answer requested on whether they intended to participate in the licence in accordance with the agreement between Iceland and Norway from 1981, which entails the right of Norway to participate in licences within a part of the area up to a 25 % share. Norway was in this case invited to participate in the whole licence area, which partially extends outside of the area of the agreement, after consultation with the applicants.

The anticipated licensees have read the draft licence and submitted their comments, which Orkustofnun has taken into account as much as possible and as has been agreed by the parties involved. Norway has also participated in this process through the Ministry of Petroleum and Energy (MPE), i.e. gone through the draft licence and submitted comments to Orkustofnun.

The granting of the third licence by Orkustofnun concludes the licensing as a result of the second licensing round on the Icelandic continental shelf which had a deadline for applications on 2 April 2012. Orkustofnun had previously, in January 2013, granted licences to Faroe Petroleum Norge AS, Iceland Petroleum ehf and Petoro Iceland AS, on the one hand, and Valiant Petroleum ehf [now Ithaca Energy ehf], Kolvetni ehf and Petoro Iceland. The licences were granted on the basis of the Hydrocarbons Act, No. 12/2001 on prospecting, exploration and production of hydrocarbons, Regulation No. 884/2011, along with information in the application and other information from the applicants. 

Blue: Ithaca Energy ehf, Kolvetni ehf and Petoro Iceland AS.

Red: Faroe Petroleum Norge AS, Iceland Petroleum ehf and Petoro Iceland AS.

Green: CNOOC International Ltd, Eykon Energy ehf. and Petoro Iceland AS.