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Greenland ends decades-long hunt for oil with ban on new licensing

Highlights

'Price of oil extraction is too high'

Comes after 2020 strategy to promote new drilling

Greenland has decided to cease issuing new licenses for oil and gas exploration, ending a multi-decade search for resources in its remote Arctic waters.

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Minister of natural resources Naaja Nathanielsen said that despite large potential oil reserves off Greenland's west coast, it now considered the price of oil extraction as "too high".

"This is based upon economic calculations, but considerations of the impact on climate and the environment also play a central role in the decision," Nathanielsen said.

"This step has been taken for the sake of our nature, for the sake of our fisheries, for the sake of our tourism industry, and to focus our business on sustainable potentials."

The move came just a year and a half after the government adopted a new oil and gas strategy with a focus on promoting exploration in the island.

According to official geological surveys of Denmark and Greenland, some 18 billion de-risked barrels of oil lie off the west coast of Greenland, with large deposits also expected below the seabed on the east coast of Greenland.

Indeed, despite the Arctic conditions, the world's biggest oil companies have shown interest in looking for oil resources in Greenland, which first drew commercial interest amid crude oil price spikes in the 1970s.

A self-ruling territory of Denmark, Greenland gained full control of its subsoil resources in 2009.

Cairn Energy spent over $1 billion drilling a run of dud wells offshore Greenland early in the decade. BP, Chevron, ConocoPhillips, Eni, Equinor and Shell were granted exploration/exploitation licenses for Northeast Greenland in 2013.

At the time, drilling costs were estimated to be about $100 million per exploration well and $6 billion-$7 billion to develop an entire field.

Greenland, the world's largest island, launched its latest round of exploration has also offered separate open-door procedures and two exploration licenses were granted in 2019.

Government data showed there are currently four active exploration licenses in Greenland, one in the western Davis Strait held by Panoceanic Energy and state-run NUNAOIL. Three more are onshore the in eastern Jameson Land held by Greenland Gas & Oil. The blocks expire in 2027 and 2028.

Greenland's domestic energy goal is to be powered 100% by clean energy by 2030.