What's happening

On 15 July 2021, the Greenland government published a decision to terminate the issuance of new licenses for exploration and production of hydrocarbons on the island. The key factor in the adoption of this measure was the climatic changes caused by oil production. In its message, the government stressed that the price the region pays for the exploration of hydrocarbon resources is too high.

This step was taken to preserve the nature of the island, to support the fishing and tourism sector, as well as to fulfill the UN Sustainable Development Goals.

According to the US Geological Service, Greenland unexplored oil reserves are 17.5 billion barrels, and natural gas reserves reach 4.2 trillion cubic meters.

Since the 1970s, oil exploration in Greenland has been carried out by major companies such as Shell, Chevron and ExxonMobil. However, the island's remote location and harsh weather conditions significantly limited the possibilities, so for 50 years no oil was found there.

There are currently four hydrocarbon exploration licenses in Greenland that will remain active until expiration. They are owned by two small companies.

What does it mean

For half a century, Danish-owned Greenland has relied on hydrocarbon resources, which, according to various geological agencies, the island is very rich. Perhaps, after the oil crisis of the 1970s, it seemed an extremely promising "gold mine", but times are changing, and now the trend for sustainable development is in the lead in the world.

“The future is not with oil. It belongs to renewable energy sources” - the government said in a statement.

It is worth noting that the International Energy Agency has repeatedly called for an end to investment in exploration and development of new oil fields in order to achieve carbon neutrality by 2050. Apparently, Greenland has become a pioneer in this measure.

The decision to halt oil exploration on the island also fits well with the recently adopted EU Green Pact, Fit for 55, which envisages a series of measures to reduce carbon dioxide emissions by 55% by 2030.

Source RBC