Greenland oil potential a big draw

Greenland, home to the world's smallest national oil company with nine employees and no oil, wants to build wealth and power with hydrocarbons like the Abu Dhabi of half a century earlier.

Greenland is stepping up its search for hydrocarbons as it seeks to become economically independent from Denmark. Steen Ulrik Johannessen / AFP

With nine employees and no oil, it is the smallest national oil company in the world. Its most promising exploration blocks are accessible 60 days or fewer a year, and two years and US$600 million (Dh2.2 billion) into its first drilling campaign, every well has come up dry.

The quest of Nunaoil, the national oil company of Greenland, has no guaranteed payoff. But the search for fields holding 500 million barrels of oil or more - a possibility that has attracted oil majors such as Shell and ExxonMobil as partners - is motivated by a higher mission.

Greenland, an Arctic island emerging from three centuries of Danish rule, relies on its former coloniser for money and strategic matters such as foreign policy and defence. Nunaoil's job is to change that.

"In order to be an independent country with regards to our economy, the only way we can do that is to extract potential hydrocarbon resources," says Hans Kristian Olsen, the managing director of Nunaoil.

In many ways, Greenland's ambitions echo those of Abu Dhabi half a century earlier.

Before the emirate's first commercial find - the 1960 discovery of the prolific Bab field - the Bedouin tribesmen fished, dived for pearls or roamed the desert outside the scattered oases that supported limited farming.

Two years later, Abu Dhabi sent off its maiden oil cargo. Another decade and Sheikh Zayed founded the UAE.

Today the world's top universities give their names to local campuses, prize-winning architects dream up new shapes for the skyline, and citizens benefit from generous government support ranging from jobs to petrol to the water flowing in their pipes at home.

Abu Dhabi has also recruited foreigners to bring talent and experience to the point that today they outnumber locals - an approach Greenland recognises is also necessary for its mission.

"We are a small nation," says Mr Olsen, who was in Dubai for an oil conference. "If a discovery takes place, then we have to be able to tolerate a new foreign workforce to come to work together with us. This is necessary, and we have to accept that."

About 50 times the size of Denmark in land area, Greenland is home to 57,000 people, many of them the Inuit who share their name with the natives of Alaska and Siberia. Locals hunt whales, seals and reindeer, and fish are the top export.

"From an artistic and cultural perspective, Greenland has always been the Orient of Modern Denmark," Khaled Ramadan, a Danish artist, once wrote.

Mr Olsen comes from Sisimut, a fishing town above the Arctic Circle, where his father worked as a pipefitter and his mother served as mayor. Because Greenland had no technical schools, he went to Denmark for high school and university, launching his career as a mining geologist.

Around the same time, in 1979, Greenland won limited sovereignty from the Danish parliament. Three decades later it gained self-rule status, including more control over natural resources including gold and diamonds - and the yet-to-be-discovered oil.

But it retains ties to Denmark, the most significant of which is Denmark's subsidy of more than US$10,000 (Dh36,732) a year for every Greenlander.

The counterpoint is the international rush for a slice of the exploration rights in Greenland. Norway's Statoil became the latest investor last month when it bought a 30.6 per cent stake in a licence from Cairn Energy, a Scottish company that is currently Greenland's biggest foreign partner.

It is leading the drilling campaign in the offshore area bordering Canadian waters, although it plugged and abandoned two wells after coming up dry.

More players could enter in the next two years as Greenland auctions the rights to a set of exploration blocks near Norway.

Although they are expected to hold even greater reserves than those on the western coast, Nunaoil has extended the exploration period from 10 to 16 years because of the thick ice cover that is penetrable only two months a year at most.

The goal is to find fields that will produce for 30 to 50 years, although Mr Olsen is reluctant to put a figure to his hopes for how much Greenland can eventually produce.

"Of course, in the worst case, there will never be a commercial discovery in Greenland of oil and gas," says Mr Olsen.

He points to the blocks nearest Canada's Newfoundland and Labrador on a Nunaoil exploration map. "But here you can see that this is our nearest border - with an oil and gas producing province. So why shouldn't there be any oil and gas on our side?"

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