China National Offshore Oil Corp (HKG:0883, NYSE:CEO), also known as CNOOC, is partnering with Iceland’s Eykon Energy in an application for a licence to explore and produce oil and gas in Arctic waters offshore Iceland. As the Financial Times reported yesterday, June 9, CNOOC was to become the first
Chinese oil company to play for Arctic oil, underscoring China’s growing interest in the polar region. CNOOC’s share price was little changed in afternoon trading in Hong Kong today.
**CNOOC Partnering with Icelandic Business**
The FT quoted Eykon’s chairman, Heidar Mar Gudjonsson, as saying that there was an influx of international capital and companies to the Arctic. “It’s not just oil and gas,” he added. “There are minerals, there are potential new shipping routes.”
In a press release, Iceland’s national energy authority Orkustofnun said that it had granted Eykon an extension until 1 July 2013 to find a partner to their application submitted in the second licensing round of the Dreki Area in northeast Iceland and neighbouring coastal waters in oil-producing Norway.
With CNOOC having decided to participate in Eykon Energy’s application as an operator and potential licensee, Orkustofnun said it would evaluate further the financial and technical capacity of the applicants and their ability to undertake the exploration and production. The procession of the application is likely to be finalised later in 2013.
Thorarinn Sveinn Arnarson, hydrocarbon licensing manager at Orkustofnun, said that Eykon had been previously unable to move forward in the licensing procedure without a partner.
“Now we can evaluate the technical merits of the application and the qualifications of the companies, both technical and financial, before we make our decision,” Arnarson said, as quoted by The Wall Street
CNOOC’s share price was less than once percent up in intraday trading in Hong Kong today. In New York where CNOOC’s shares are listed as American Depository Receipts (ADRs), CNOOC’s share price closed marginally lower last Friday, June 7.
**Arctic Oil Exploration**
CNOOC’s interest in Arctic oil came a month after China was successful in a bid to become a permanent observer in the Arctic Council. In addition, in April, Iceland became the first European country to sign a free-trade agreement with China.
Earlier this year CNOOC and other Chinese oil companies held talks with Igor Sechin, the head of Russia’s state-controlled OAO Rosneft (MCX:ROSN) during his visit to China about potential offshore projects in the Russian Arctic.
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According to Eykon’s Gudjonsson, there was no political move behind the company’s deal with CNOOC. “This is a very interesting exploration opportunity and there were a number of potential takers,” he said. “CNOOC stepped up because it has more resources.”
**CNOOC’s share price was 0.30 percent higher at HK$13.46 in Hong Kong as of 15:15 HKT on 10 June 2013. In New York, CNOOC’s share price closed 0.11 percent down at $175.62 on June 7.**