Iceland Oil Exploration Applicants Drop Out Skip to content

Iceland Oil Exploration Applicants Drop Out

Both applicants for oil exploration rights in the so-called Dragon Zone off the northeast coast of Iceland have withdrawn their applications. Minister of Industry Katrín Júlíusdóttir said yesterday that she is eager to have other companies take over the project.

The withdrawn companies are the Norwegian Sagex Petroleum and the Icelandic Lindir Explorations, which had applied jointly, and Norwegian Aker, which withdrew its application last summer, reports.

The main reason for Sagex and Lindir backing out of the project is the complex tax system in Iceland, as the CEO of Sagex, Terje Hagevang, told RÚV.

However, the company is still interested in oil exploration in the Dragon Zone, provided other companies participate in the project as well. If the tax environment were more fortunate, other companies would be likely to join in, Hagevang claimed.

This means that experimental drilling in the zone won’t begin next year as hoped. Júlíusdóttir told that new tenders can be offered soon so that the project won’t undergo any more delays.

The minister admitted that the project was launched at an unfortunate time considering the current recession Iceland is going through. However, the recession encourages the government to carry on with the oil exploration, she added.

An announcement from the Ministry of Industry explained that all companies that have expressed interest in oil exploration in the Dragon Zone will be contacted to get a clearer picture of the reasons behind them not carrying their applications through. Then the ministry will estimate when new tenders for oil exploration rights can be made.

Click here to read more about the applicants, which have now dropped out.

Photo: Minister of Industry Katrín Júlíusdóttir.

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