Natural resources
Petroleum giants relinquish interest in Arctic drilling licenses
© Ria Novosti. Valeriy Melnikov

Petroleum giants relinquish interest in Arctic drilling licenses

International petroleum giants Statoil, Royal Dutch Shell and ConocoPhillips have relinquished their interest in licenses issued by the US Government to drill exploratory wells in the Arctic worth an estimated $2.5 billion, RIA Novosti reports, quoting Bloomberg.

According to Bloomberg, the companies have renounced almost 80% of all licenses bought by them at a US Government auction in 2008. These licenses allowed them to drill test wells on continental shelf within an area of 11,300 square kilometers north of Alaska in the Chukchi Sea.

Bloomberg analysts link this decision with a decrease in global oil prices. This price slump forces companies to cut back on geological prospecting operations, to mothball current projects and to axe new project budgets. The article notes that Shell and ConocoPhillips announced their decision before May 1, the deadline for when they were once again scheduled to pay the US authorities for leasing their respective plots.

High Arctic operational costs mean that this region remains attractive only to  major investors, transnational companies with large-scale budgets, notes a senior analyst in cooperation with the American Petroleum Institute (API).