Greenland’s goal of gaining full independence from Denmark is getting closer as rising oil prices and melting ice spark renewed interest in its fossil fuels from companies such as Royal Dutch Shell Plc and Statoil ASA.
“The recent discoveries of possible findings of oil have increased the debate on the issue of independence,” said Greenland’s Prime Minister Kuupik Kleist, in an interview in Oslo yesterday, after meeting with Norwegian Foreign Minister Jonas Gahr Stoere. “It is a goal and every day we are coming closer to that.”
Greenland is betting the development of its petroleum resources will help end nearly 300 years of Danish rule. The island is receiving “enormous interest” from the oil industry for licensing rounds in 2012 and 2013, according to its energy agency and got a record 17 applications from 12 companies for last year’s tender in the Baffin Bay, including from Cairn Energy Plc, Statoil, Royal Dutch Shell and A P Moeller-Maersk A/S.
“There’s no automatic mechanism in becoming economically self-sufficient and being a sovereign state, that’s two different issues,” Kleist said. “But of course if you’re economically self-sufficient, that will help a lot.”
Greenland’s northeast holds 31.4 billion barrels of oil equivalent while a further 17 billion barrels may lie under the sea floor between Greenland and Canada, according to the US Geological Survey. The Organization of Petroleum Exporting Countries produced 29.2 million barrels of oil a day in December last year, according to Bloomberg estimates. Cairn started drilling off Greenland’s west coast last year and said it found oil in one of its wells.
Crude rise
“If everything goes as we wish, 5 to 10 years would probably be the timetable” for oil production to start, Kleist said.
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After a series of failed attempts by explorers to make commercial petroleum finds in Greenland over the past 30 years, oil companies are now returning as global warming makes Arctic exploration more feasible and as reserves elsewhere dwindle.
With crude oil rising to a 27-month high of $92.58 a barrel last week and tighter legislation in the Gulf of Mexico threatening to hamper drilling there, oil companies are turning to less hospitable regions. Greenland awarded seven licences last year to eight companies including Statoil, Royal Dutch Shell and Maersk.
Danish subsidy
Denmark gives Greenland an annual subsidy of about $608 million, or $10,700 per person. The Arctic island, with a population of 57,000, was granted home rule in 1979 and increased local powers in 2009. The island’s $2 billion economy derives about half its exports from shrimp, according to Greenland’s statistics agency.
While Kleist declined to comment on how much oil revenue the country would need to wean itself of Denmark’s subsidies, he said the country “urgently” needs to broaden its income base.
“We’re trying to develop a more diversified economy, we’re looking at tourism, we’re looking at mineral resources and of course we’re still looking at developing the harvesting of living resources,” Kleist said. “As it is today, we are very vulnerable.”
Kleist, who leads Greenland’s socialist Inuit Ataqatigiit party and has been in government with the Demokraatit and Kattusseqatigiit parties since June 2009, met with Norway’s foreign minister to discuss “Arctic issues,” including natural resource management, climate change and energy cooperation, Gahr Stoere said in the interview.