Greenland Stops Its 50-Year Unsuccessful Effort To Produce Oil

Greenland has recently announced that it would be suspending a strategy of searching for oil and would stop any further issuing of exploration licences which effectively brought an end to a 50-year old ambition of the country to become an oil producing country.

Greenland has been trying to find oil sources since the 1970s and involved major global oil companies such as Shell, Chevron, ExxonMobil and Eni. However all of those explorations did not meet success and no commercial oil field was found.

Former United States President Donald Trump had proposed to purchase the Arctic island because of the potential mineral wealth and strategic location of Greenland. However Greenland’s government and Denmark had promptly dismissed the proposal from Trump. In a change of policy, the new administration of the new US President Joe Biden has clarified earlier this year that the US did not wish to purchase the the territory.

The government “has assessed that the environmental consequences of oil exploration and extraction are too great,” said Naaja Nathanielsen, Greenland’s minister of natural resources, in a statement recently.

There is potentially up to 31.4 billion barrels of oil equivalent present under the ground in the northeast of Greenland, according to an estimate in a 2007 US Geological Survey (USGS) report.

However over the past decade, high volatility in the oil price globally and the risks and higher costs of exploring oil in the pristine and vulnerable Arctic waters has dissuaded Greenland’s interest in exploring for oil. One of the reasons for the country seeking to explore oil was its high dependence on its fishing industry.

Currently there are only four active exploration and exploitation licences left, shows data issued by the Greenland government. These include three onshore exploration licenses in Jameson Land on the east coast and one offshore license in southwest Greenland. These licenses are set to expire in 2027 and 2028 respectively.

At the peak of the oil exploration efforts in Greenland between 2002 and 2014, the country had issued more than 20 offshore licences to companies and entities.

Economic analysis by the government showed any development of oil fields would either deliver low profits or make a loss, which was one of the reasons that drove the latest decision of the government in addition to concerns that such projects would be detrimental to the environment.

“It is a decision where climate considerations, environmental considerations and economic common sense go hand in hand,” Nathanielsen said. “Suspending the current oil strategy is the right choice.”

The government said that the latest decision to suspend issuing of new oil exploration licenses would came into effect from June 24.

(Adapted from RTE.ie)



Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability

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