Norway offers firms new Arctic oil, gas prospects

OSLO - Norway offered oil and gas companies new exploration areas in Arctic seas to spur activity despite opposition from environmental groups.

"This is the first announcement in frontier areas of the Barents Sea since 1996," oil and energy minister Thorhild Widvey said in a statement of the 64 blocks offered in the country's 19th licensing round.

The round will comprise 30 blocks in the Barents Sea and 34 in the Norwegian Sea, the oil and energy ministry said. Applications for acreage are due by November 15 and licences will be awarded in the first quarter of 2006, it said.

"By awarding new production licences in these ocean areas, the oil companies gain the possibility to develop areas with large resource potential," Widvey said.

"Increased Norwegian activity in the Barents Sea forms the basis for what may be the most important petroleum province in Europe," she added.

According to some official estimates, a quarter of the world's remaining petroleum resources may lie in the Arctic.

Barents activity would also support close cooperation with neighbouring Russia, Widvey told a news conference.

Oil and gas activity in the Norwegian sector of the Barents resumed this year after the government of the world's third biggest oil exporter ended in late 2003 a ban on Arctic drilling that had lasted since 2001 pending environmental impact studies.

Nineteen oil and gas companies had nominated areas by the February deadline, with 61 blocks or parts of blocks nominated by two or more firms.

Companies have been particularly keen on acreage in the little-explored Barents Sea with about half the nominations in that area where so far Statoil's Snoehvit gas field is the only petroleum development.

Norway is the third largest oil exporter after Saudi Arabia and Russia, pumping about three million barrels per day, and western Europe's biggest natural gas producer.

Companies operating off Norway have grown hungry for new acreage as production from existing oilfields in the North Sea has begun to taper off though gas output is still growing.

Norway's biggest oil and gas operator Statoil welcomed the announcement.

"The announcement is largely in line with Statoil's nominations, and we are well satisified with this licensing round," Statoil's spokesman Kristofer Hetland said.

"The announcements of new blocks is particularly important to Statoil's focus on the Norwegian Sea and Barents Sea, and the acreage in the Barents is interesting and provides a good basis for testing the geology in larger areas," Hetland said.

The blocks in the Norwegian Sea would give an opportunity to test various exploration models, and the company would follow up its nominations with an application, Hetland added.

Environmental groups slammed the government's plans.

"By opening up the spawning area of the Barents Sea cod, the Norwegian government is putting half of the world's cod at risk," the WWF conservation group said in a statement.

"Independent analysts' statistical studies show that in the worst case, there could be an oil spill in the Barents Sea with serious environmental impacts every 11 years if the oil industry is allowed to develop there," the WWF said.

Widvey said that the areas licensing round adhered to the strict environmental requirements set down by the government when it decided to reopen the Barents.

- REUTERS