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China's CNOOC eyeing Iceland's offshore Dreki Area: report

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China's CNOOC eyeing Iceland's offshore Dreki Area: report

Highlights

China National Offshore Oil Corp has reportedly shown interest inexploring in Iceland's offshore Dreki Area, partnering privately held EykonEnergy, Icelandic newspaper Vidskiptabladid reported Tuesday.

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The report said CNOOC has reached an agreement with Eykon followingyear-long negotiations and the duo will be awarded a license in coming days.

CNOOC will be "the largest operator" in the Dreki Area so far, thenewspaper said, adding that the Chinese company could likely take an 80%stake in the acreage, with Eykon retaining a 20% interest.

Iceland's National Energy Authority, known as Orkustofnun, had said May3 that it would accept Eykon's application for the third Dreki Area licenseafter "potential participants... declared interest in cooperating" with thecompany. Orkustofnun also agreed to extend the deadline for completion ofnegotiations to July 1 this year.

"The processing of the application may be finished by the end of thisyear," the authority said.

CNOOC could not be reached Wednesday for comment.

Iceland previously awarded two licenses in the Dreki Area in January,one to a consortium comprising UK's Faroe Petroleum (67.5%), IcelandPetroleum (7.5%) and Norwegian state-owned oil company Petoro (25%) and thesecond to a consortium led by UK-listed Valiant Petroleum (56.25%),partnering Kolvetni (18.75%) and Petoro (25%).

Petoro had said in January that the Dreki Area is part of a"micro-continent" containing the Norwegian island of Jan Mayen and locatedbetween the Norwegian and Greenland continental shelves.

Seabed samples from the area have indicated the presence of sedimentaryrocks and an active hydrocarbon system, it added.

Last month China became one of six nations given observer status to theArctic Council, a grouping made up of Arctic nations Canada, Denmark,Finland, Iceland, Norway, Russia, Sweden and the US.

Beijing has in recent years expressed an interest in the Arctic,including mining in Greenland. It signed a trade agreement to abolish tariffswith Iceland in April this year and both sides pledged to cooperate onvarious issues, including tourism.

--Song Yen Ling, yenling.song@platts.com

--Edited by Irene Tang, irene.tang@platts.com