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CNOOC to drill for oil in Arctic

04th March 2014

China National Offshore Oil Corp has become the first Chinese firm authorized to look for oil in the Arctic, partnering with Iceland's Eykon Energy

The Arctic region has a potential reserve of 400 billion barrels of oil equivalent

China National Offshore Oil Corp (CNOOC), an offshore oil and gas developer, has become the first Chinese firm authorized to look for oil in the Arctic, the China Daily reported.  The company partnered with Iceland's Eykon Energy in an application for a license to explore oil and gas resources in the Arctic last June.

On Jan 22, Iceland's national energy authority, Orkustofnun, gave the new offshore license to the Chinese company as an operator with a 60 per cent share, to Eykon Energy with a 15 per cent share and to Petoro Iceland AS with a 25 per cent share.

As a result of CNOOC's experience in deepwater oil exploration, it has been speeding up its influence in foreign offshore oil and gas businesses, particularly its acquisition of Nexen Inc., a Canadian oil and gas company.

Guo Haitao, associate dean of the School of Business Administration with the China University of Petroleum said, "The permission that CNOOC got from the Iceland government proves the Chinese energy companies' upstream exploration competence."

He added that the project “is still in its initial stages and will not affect China's oil and gas supply in the short run,” but it will increase the country's energy exploration technology level as well as certify its supply through various resources in the future.

CNOOC announced in late January that the company's output in 2013 was 412 million barrels of oil equivalent, of which 69 million barrels came from its acquisition of Nexen Inc.

"CNOOC will be the major operator of the project, and risks are high," Guo commented. "The Arctic region has rich oil and gas resources with a proven reserve of 400 billion barrels of oil equivalent," according to the latest annual report from CNPC Economics and Technology Research Institute.

A spokesman with CNOOC, revealed to the China Daily, that the extraction equipment in the Arctic region will differ from those used to produce crude oil in deep water due to the extremely low temperatures and Arctic ice. He added that the “the cost of the equipment fit for producing crude oil in the Arctic region will also be much higher.”


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