Cairn Energy is to team up with Norwegian group Statoil in their quest to look for oil off the coast of Greenland.
A deal has been signed for Statoil to acquire a 30.6 percent stake in one of the British explorer’s Greenland licenses, showing interest in the Arctic remains strong despite recent high-profile failures.
“The exact financial terms of the agreement are confidential,” Cairn said, according to a Reuters report. It added, however, that the Norwegian company would be paying some of the past and future exploration costs and a bonus on signing the deal.
Cairn has spent USD 1.2 billion on projects in the Arctic over the last two years, but has so far failed to get any conclusive shows. It is believed that the company hoped to get funding for all future drilling costs, but their lack of success so far has forced them to offer “attractive” partnership terms to investors.
“Arctic specialist Statoil’s early entry into a part of Cairn’s Greenland acreage, on attractive terms, validates the industry’s and Cairn’s long-held belief in the region’s multi-billion barrel exploration potential,” Morgan Stanley analysts said in a note.
Environmental groups have attempted to disrupt Cairn’s activities in the Arctic several times, pointing out than an oil spill in the pristine region would be detrimental to wildlife and almost impossible to clean up. It is thought, however, that Greenland could hold as many as 20 billion barrels of oil, making the semi-autonomous Danish island one the world’s biggest producers.
(Photos: Anders Peter Amsnæs)