The Dreki area is to the north-east of Iceland (Map: Drekiarea.is)The National Energy Authority of Iceland (NEA) has today finished processing two applications for licences for exploration and production of hydrocarbons in the Dreki Area. The Ministry of Petroleum and Energy in Norway has today, 3 December 2012, notified NEA of their decision to participate in both licences to a 25 % share in accordance with the agreement between Iceland and Norway.

NEA sought the opinions of the Ministry for the Environment and the Ministry of Fisheries and Agriculture in accordance with the hydrocarbons act and evaluated the opinions based on the applications and the work programmes involved.

Furthermore, NEA made a careful evaluation of the technical and geological capacity of the applicants to handle the extensive activities associated with the licence. Finally, NEA studied the financial capacity of the parent companies of the applicants in order to ensure that the applicants have sufficient financial strength to conduct the activities for the long-term and can handle the corresponding environmental and safety elements.

Following the processing of NEA of the applications

Blue: Valiant Petroleum ehf. and Kolvetni ehf.  Red: Faroe Petroleum Norge AS, Branch in Iceland and Iceland Petroleum ehf. Click to enlarge. Photo by NEA.

at the end of October, NEA made a decision to grant licences to Faroe Petroleum Norge AS, Branch in Iceland and Iceland Petroleum ehf., on the one hand, and Valiant Petroleum ehf. and Kolvetni ehf., on the other.

Furthermore, the Norwegian authorities were notified of the decision, draft licences sent for their perusal and a formal answer requested on whether they intended to participate in the licences in accordance with the agreement between Iceland and Norway from 1981, which entails the right of Norway to participate in licences within the area of the agreement up to a 25 % share.

The anticipated licensees have read the draft licences and submitted their comments, which NEA has taken into account as has been agreed by the parties involved. Norway has also participated in this process through the Ministry of Petroleum and Energy, i.e. gone through the draft licences and submitted comments to NEA.

The Ministry of Petroleum and Energy in Norway has today, 3 December 2012, notified NEA of Norway's decision to participate in both licences to a 25 % share in accordance with the agreement between Iceland and Norway.
 

The licences cannot by issued before the Norwegian Parliament has approved the decision on the participation by the Kingdom of Norway through the State-owned oil company Petoro AS. Following this and the signing of the parties to the licences of their joint operating agreements, NEA will grant the licences, probably in the beginning of January of next year.

A third application was received from Eykon Energy ehf. The processing of this application was delayed and the applicant given a respite until 1 May 2013 to find an additional participant in the licence that receives approval by NEA on having sufficient expertise, experience and capacity to undertake the licenced activities. NEA will take the application for final processing subsequent to receiving information on such a new participant in the application.

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