Iceland Targets Commercial Oil Discoveries Off Its Coast by 2025

Iceland expects to have made commercial oil discoveries in three separate areas off its coast by 2025, according to Foreign Minister Ossur Skarphedinsson.

The areas are in the waters at Dreki northeast of Iceland, near the volcanic island of Jan Mayen, and off the coast of east Greenland, the minister said in an e-mailed statement today. Iceland is particularly “optimistic” about finding oil at Dreki after research last year provided “incontestable proof” of its existence, he said.

Oil and gas producers are seeking untapped reserves in the world’s northernmost regions as deposits in more hospitable climates mature and governments restrict access. The Arctic may hold 90 billion barrels of oil, more than the combined known reserves of Nigeria, Kazakhstan and Mexico, the U.S. Geological Survey said in 2008.

Iceland is planning to build infrastructure to service the three areas, Skarphedinsson said today. The country has held talks with Greenland’s Prime Minister Kuupik Kleist and Norwegian Foreign Minister Jonas Gahr Stoere about building “Icelandic service centers for oil exploration,” he said, without providing further detail.

Iceland last October started a second round of bidding for oil and gas exploration licenses after its first round was derailed in 2009 when four companies pulled out.

Faroe Petroleum Plc and Valiant Petroleum Plc are amongst companies to have applied for licenses in the latest round, according to Iceland’s National Energy Authority, which plans to announce the awards by the end of November.