Chinese oil and gas producers show rising interest in oil exploration and development in the arctic regions nowadays.
An insider with China Petroleum Corp. (Sinopec Group), one of the top two oil and gas producers in the Chinese mainland, confirmed in an interview on June 13 that it did be in initial talks with the Icelandic government over oil exploration in northeastern coastal waters of the country. Prior to this, China National Offshore Oil Corp. (CNOOC), the biggest offshore oil producer in the Chinese mainland, said publicly that it had been invited by the Icelandic government as well as Iceland-based EykonEnergy to take part in offshore oil and gas exploration and development in the arctic waters of the country and both sides were busy with a negotiation currently.
In line with industry observers, it should be a strategic move for the two Chinese oil firms to enter the arctic regions and the active attitude of Iceland will help them to achieve the goal smoothly. However, both the cost and related technology threshold will be high still in the short run. Notably, there will be great possibility for them to be opposed by environmental protection organizations once related projects are triggered. Thus it is better for them to work out an emergency scheme in advance. Actually, leading global oil and gas firms including UK-based Shell and Gasprom, the biggest energy firm in Russia, have launched explorations in the arctic regions, but opposed by environmental protection organizations including Greenpeace in succession.
Zhang Kang, a researcher with Sinopec said that Iceland saw local economy be relatively backward and was in urgent need of huge investment. Thus Chinese firms were welcome and the investment environment was very loose. It inked a free trade agreement (FTA) with China in April this year, becoming the first European nation to sign such an agreement with China. Most of the oil and gas resources in the arctic circle were mainly controlled by Russia, the US, and Canada currently, thus it was a very tough job for Chinese oil firms to establish a foothold there. And in order to achieve the goal, they seemed to have no other choice but to cooperate with oil firms from Norway.
A report from the United States Geological Survey (USGS) shows that oil reserves in the arctic regions stands at about 90 billion barrels. And so far, oil firms from both Norway and Britain have gained approval from the Icelandic government to launch explorations in Dreki, an oil-rich region in Iceland.
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