LONDON (Dow Jones), Nov. 6, 2009

A group of western oil companies and the state-owned Greenland oil company have formed an industry lobby group to facilitate the development of hydrocarbon resources in the country, Denmark's DONG Energy said in a statement Friday.

The Greenland Oil Industry Association consists of DONG, the Greenland subsidiaries of Exxon Mobil Corp., Chevron Corp., Cairn Energy PLC, Husky Energy Inc., PA Resources AB and state-owned Nunaoil AS.

"With the increased focus on Greenland as a potential oil and gas province, the energy companies present in Greenland have been in dialogue on the need for a common approach to several issues," said DONG Chairman Arne Rosenkrands. "We are confident that the GOIA will make a solid contribution to the successful development of the industry in Greenland."

Companies in the GOIA will cooperate to ensure safe and environmentally friendly exploration drilling and oil production activities and communicate with local authorities and communities, the statement said.

Greenland is widely seen in the industry to have great potential for oil and gas discoveries, although its remote location and harsh environment will make it costly and technically challenging to explore and develop resources.

Cairn Chief Executive Mike Watts describes Greenland as one of the top 10 oil exploration hotspots in the world.

Last month, Malaysian state oil company Petroliam Nasional Berhad bought a 10% stake in Cairn's six offshore exploration blocks in Greenland for $310 million in cash - an unusual deal for such high risk frontier exploration acreage.

Cairn has been conducting seismic surveys on its exploration blocks and plans to drill its first wells next year.  

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