OSLO: The oil and gas majors are looking to the promise of the Barents Sea, attracted by Norway's political stability against a backdrop of unrest in the Middle East and falling North Sea output.
Of 24 offshore oil and gas production licenses Norway awarded on April 15, half were in the Barents Sea in the Arctic, an unprecedented number.
"There is unprecedented interest in our northernmost seas," Norway's Petroleum and Energy Minister Ola Borten Moe said of the licensing round, adding "the present level of activity in the Barents Sea is high and increasing."
Since peaking in 2001 at round three million barrels per day, Norway's oil output has declined steadily to around two mbpd currently.
With reserves in the North Sea shrinking and major discoveries becoming rarer, Norway has decided to open up its northernmost waters in response to industry pressure and the need to ensure a steady source of income for its generous welfare state.
Exploration and development in the Arctic is technologically complex and expensive, with companies having to come with extremely low temperatures, sea ice, long distances from existing infrastructure and total darkness in winter,
But soaring oil prices and technological advances have made the region attractive despite the challenges, with the Arctic as a whole perhaps containing 13 percent of the oil and 30 percent of the gas on the planet not yet discovered, according to the US Geological survey.
Among the firms awarded licenses earlier this month were Norwegian state-owned giant Statoil, France's GDF Suez, US giant ExxonMobil, Eni of Italy, German RWE Dea and Britain's BG.
Statoil said it was pleased to have won licences near the Skrugard deposit, which it had called "one of the most important finds on the Norwegian continental shelf in the last decade."
The field could contain up to 250 million barrels of oil and its recent discovery rekindled interest in the Barents Sea.
"Skrugard could mean that we are opening up a new oil province," Statoil chief executive Helge Lund said of the find.
Before Skrugard, some 80 exploration wells had resulted in only two major finds in Norwegian waters of the Barents Sea -- Snoehvit, a gas find developed by Statoil, and Goliat, run by Eni which should come on-line in 2013.
In Russian waters lies the enormous Shtokman gas field, for which Russian giant Gazprom has taken on Statoil and Total for its development.
If the oil majors are newly enthusiastic over the Barents Sea, environmentalists worry about potential damage to its fragile and fish-filled waters.
"The oil industry can now frolic in vulnerable waters that should have never been opened up to prospecting," Lars Haltbrekken of Friends of the Earth Norway said in reaction to the new licensing round.
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