* First successful licensing round after 2009 flop
* Norway to take 25-pct stakes in Icelandic oil licences
* Norway offshore area near Iceland seen rich in oil, gas
By Gwladys Fouche
OSLO, Jan 4 Iceland is opening its waters for
exploration to energy firms, and involving the help of oil-rich
Norway in the process, as it looks to make use of its energy
resources and boost its fragile economy.
On Friday Iceland and Norway are scheduled to sign a deal
that will see Norwegian state-owned firm Petoro take 25-percent
stakes in Icelandic oil licences awarded last month to
London-listed firms Valiant Petroleum and Faroe
Iceland plunged into recession in 2009 after its biggest
banks collapsed in the space of a few days when credit dried up
Its 320,000 inhabitants were faced with bank liabilities
eight times the size of the country's gross domestic product.
More recently its economy has shown signs of recovery and
authorities are hoping that developing the island's rich energy
resources will help spur Iceland's growth.
"It brings us some optimism that we have such
possibilities," said Gudni Johannesson, director general of
Iceland's National Energy Authority.
"This will not solve the economics crisis we have now, but
it will help us through the next one," he told Reuters.
Norway, the world's eighth-largest oil exporter, is taking
the stakes in the licences under a 1981 treaty giving it and
Iceland the right to own up to 25 percent in offshore areas
along an agreed line in their previously disputed territorial
Norway has rights in the area as it owns Jan Mayen island, a
speck of land situated to the north-east of Iceland, some 1,000
kilometres (621 miles) west of Europe.
"We can contribute with our knowledge from the Norwegian
experience (in oil exploration)," Petoro spokesman Sveinung
There are no figures for how much oil and gas Dreki could
hold but the area off Jan Mayen island, which is geologically
similar, could be promising.
It may hold up between 250 million and 500 million barrels
of oil, the equivalent of a mid-sized North Sea field, according
to the Norwegian Petroleum Directorate (NPD), the agency which
manages Norway's fossil fuel resources.
There could also be large gas deposits, potentially 100
billion standard cubic metres, according to the NPD.
SECOND TIME AROUND
The tender is a first for Iceland in its bid to open its
offshore areas to oil firms. In 2009, in the midst of its
financial troubles, Reykjavik tried and failed to launch a
Yet this time just two international firms applied for
licences, with none of the oil majors applying. An application
by a third company, Iceland's Eykon Energy, has been delayed
until May to give it more time to find a suitable backer.
In the licence awarded to Faroe Petroleum, the firm will
hold a 67.5-percent stake, Petoro 25 percent and private firm
Iceland Petroleum the remaining 7.5 percent.
In the licence awarded to Valiant Petroleum, it will hold
56.25 percent, Petoro 25 percent and Icelandic private firm
Kolvetni 18.75 percent.
The next step will be to analyse data already gathered about
Dreki and to conduct more surveys of the seabed, which is
expected to take about two years, with drilling operations
potentially starting in five years.