Iceland aims to open its waters for exploration to oil firms this autumn, its energy minister said, as part of a drive to make use of the country's rich energy resources and boost its debt-ridden economy, according to Reuters. Iceland plunged into recession in 2009 after its biggest banks collapsed in the space of a few days when credit dried up globally. Its 318,000 inhabitants were faced with bank liabilities eight times the size of the country's GDP. More recently its economy has shown signs of recovery and authorities are hoping that developing the island's rich energy resources will be one of the pillars on which to base Iceland's future growth. From Oct. 3 until April 2, international oil firms will be able to apply for exploration licences in an offshore zone about the size of the Netherlands in Dreki -- Dragon in Icelandic -- an area to the northeast of the island. "It is important for us to explore new ways to exploit our natural resources," Katrin Juliusdottir, minister for trade, energy and tourism, said by phone from Reykjavik. "The international oil companies are starting to look at unexplored areas again so, of course, we want to be there as well." If successful, the tender would for the first time open Iceland to offshore oil and gas exploration. In 2009 Reykjavik tried and failed to launch an licensing round, attracting little interest from oil companies. This round will be different, the minister said, as Iceland is changing its tax legislation to make it more attractive. "The tax system is now more competitive with the Norwegian tax system," Juliusdottir said, referring to the world's fifth-largest oil exporter and Iceland's Nordic cousin. She said the timing was much better than for the last round. "It was a strange time to do a licensing round in 2009, just a few months after an international banking crash ... The times have changed and things are looking up," she said. Iceland's potential oil and gas resources are on the outer fringe of the Arctic, an area that could hold some 90 billion barrels of oil equivalent, according to the U.S. Geological Survey. Near Iceland's Dreki, Norway is surveying the area around Jan Mayen Island for oil and gas, while to the west of Iceland, off Greenland's west coast, Cairn Energy is attempting to drill for oil. Norwegian company Statoil's CEO Helge Lund told Reuters last week that the firm would "probably look at" Iceland's oil tender. "We are clearly looking at areas in the vicinity of Norway," he said. POWER TO SCOTLAND? Aside from oil and gas, Iceland is investigating the possibility of building a power cable to Scotland, about 800 km (500 miles) away, to trade its electricity, which is entirely generated by green energy -- either hydro or geothermal. The proposed cable is part of a wider drive to offer power to energy-hungry industries other than the aluminium smelters on which Iceland relies heavily. "We have a lot of stranded power as we are a closed system," Juliusdottir said. "This could give us more flexibility ... We want to diversify our economy more." Iceland's main power firm is doing a feasibility study for the cable scheme that is expected to take two years, she said. One policy the Social Democrat-led government rules out is further privatisation of the energy sector, especially following a political row earlier this year over Magma Energy's stake in Icelandic geothermal power firm HS Orka. The firm's purchase of more than 98 percent of HS Orka angered some Icelandic politicians and activists, notably singer Bjork, who say the island's natural resources should not be owned by foreigners. Magma, since bought by Canadian-listed Alterra Power , has said it would sell a quarter of its stake, helping to defuse tensions over the issue. "This government has no intention of privatising the energy sector," said Juliusdottir. "A sensible use of our resources is what we base our livelihood on."
