Faroe Petroleum announced that, in advance of potentially submitting applications for licenses, it has pre‐qualified as an operator for the Greenland 2010 Baffin Bay Licensing Round.
The undiscovered oil and gas potential offshore West Greenland, which includes the Baffin Bay Licensing Round area, is estimated by the U.S. Geological Survey (USGS) to contain up to 18 billion barrels of oil equivalent.
The Baffin Bay Licensing Round, for which applications are being sought by May 2010, covers the prospective north west area of Greenland and is north of the Disko area where licenses were awarded to a number of companies including Cairn Energy, Chevron and Exxon, in 2007.
The area to be licensed is substantial and has been divided into 14 license blocks covering a total area of 151,358 km². Seismic data coverage has improved significantly during recent years in preparation for licensing rounds in the region and there are nine seismic surveys available covering 21,257 km².
The pre‐qualification of Faroe Petroleum as an exploration operator is a key part of the process the Company is pursuing in advance of potentially applying for licenses in Greenland. Greenland is a modern, democratic, and politically stable society, within the kingdom of Denmark with home rule government, and strong association with Denmark in such areas as foreign policy, common currency, jurisdiction and defence.
Licences are granted on terms very similar to the well known terms applicable in the North Sea. The fiscal terms for future production in Greenland are similar to those in place for the UK and the Faroe Islands and are generally regarded as attractive.
Graham Stewart, Chief Executive of Faroe, commented, "We are pleased to announce our pre‐qualification as an operator in Greenland, ahead of the upcoming 2010 Baffin Bay Licensing Round. As a key part of the Arctic region, with its potential to hold up to 25% of the world's undiscovered oil and gas resources, we are excited about this new opportunity. Greenland would represent a natural progression for Faroe Petroleum as a frontier exploration company focused on the Atlantic Margin and Norway and with its origins in the Faroe Islands.
"This is a technical and geopolitical environment in which we believe we have strong credentials to build a successful exploration portfolio and we are excited at the opportunity it presents to us."
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