Exclusive licenses offered for oil exploration off Iceland in January 2009.

Reykjavik, 18 December 2007.

This morning, the Government of Iceland approved Minister of Industry Ossur Skarphedinsson´s proposal to offer exclusive licenses for oil and gas exploration and production in the Dreki Area (the Atlantic, northeast of Iceland, on the Jan Mayen Ridge, between Iceland and the island of Jan Mayen.) The tentative starting date of the offer period is 15 January 2009. International companies have expressed interest in the area.

Seismic surveys and other geophysical measurements indicate that producible quantities of oil and gas could be found as they have been in adjacent and geologically similar areas. Recent strides in drilling and production technology along with other nations´ experience with oil and gas production at great ocean depths and in northerly regions have made searching for these resources in the Dreki Area possible. Further research, including exploratory drilling, is necessary to verify whether oil and gas exist in the Dreki Area. The Government´s approval is based on the findings of a detailed strategic environmental assessment report on the matter.

The Government aims at sensible utilization of oil resources found in the greatest possible harmony with the environment and society. "There is no assurance that producible quantities of oil and gas will be found in the Dreki Area, but it is clear that considerable oil and gas discoveries could have vigorous impact on Iceland´s economy. The gross domestic product could increase considerably when construction and production are at their peak, and the State Treasury´s revenues would similarly increase. This would therefore strengthen the nation´s economic foundations; in addition, oil production would reinforce settlement in Northeast Iceland," said Minister Ossur Skarphedinsson.

There will be stringent requirements on security and work safety as well as on environmental protection. Use of the best available technology will be demanded to reduce the environmental impact and risk of accidents and mishaps.

Research on the marine biosphere, climate and sea conditions in the Dreki Area, are already in progress. This research is important in evaluating the later impact of oil exploration and will be completed before drilling begins.

If producible quantities of oil and gas are found in the Dreki Area, this will be a major addition to the hydro-power and geothermal energy already produced in Iceland.

• Fact sheet (March 2008)
• Maps of the Dreki Area, its geology and oil and gas indications.
• Fact sheet (December 2007)
• Oil exploration in the Dreki area on the Jan Mayen Ridge. Proposal for a plan to offer exclusive exploration and production licences for oil and gas in the Dreki area (Dragon area) on the Jan Mayen Ridge, northeast of Iceland and a Strategic Environmental Assessment (SEA) of the proposed plan. Report issued in March 2007.
• List of data (seismic datasets) on the Icelandic continental shelf (from the website of the National Energy Authority).

Legal framework:

• Act no. 13/2001, on prospecting, exploration and production of hydrocarbons, as amended by Act no 49/2007.
• Rules No. 553/2001 governing the granting of licenses to prospect for hydrocarbons (unofficial translation)
• Agreement between Iceland and Norway on the continental shelf in the area between Iceland and Jan Mayen, 22 October 1981 (unofficial translation).
• Information on the legal framework for oil and gas exploration and production in Iceland (from the website of the National Energy Authority).
• Key documents describing the Icelandic framework for hydrocarbon activities (from the website of the National Energy Authority).

Other information:

• Homepage of the National Energy Authority (Orkustofnun).