Norway’s biggest energy company Statoil is considering quitting west Greenland in an effort to cut costs. The exploration licences are something the company is thinking about giving up as they are extremely expensive.
Head of exploration Tim Dodson explained that Statoil plans to be pickier about where it explores in the future because of factors such as cost and risk profile.
If the company opts to exit the region it would come as a blow to Greenland, which wants Statoil help it pump its first crude oil. Greenland has been left disappointed in the past, with Cairn Energy Plc spending in the region of $1bn in 2011 but failing to make any discoveries.
Statoil revealed earlier in the month that it was looking to reduce its spending in the long-run after outlaying a record $19bn in 2013. However, Dodson said that the company would spend about the same on exploration this year as it did last year.
Rising costs coupled with lower profitability are hindering producers. Last week, Royal Dutch Shell Plc issued its first profit warning in 10 years with earnings in the fourth quarter down from a year earlier.
Shell operates two of Statoil’s exploration licences in west Greenland, while Cairn Energy operates the 30 per cent Statoil-owned licence in Pitu, where it is currently considering drilling.