Minister sees no reason to ban oil exploration

Jóhann Páll Jóhannsson, Iceland’s Minister for the Environment, Energy, and Climate, says it would be irresponsible for the state to actively promote oil exploration, considering how the last attempt ended. However, the laws are clear: anyone may apply for a license to explore for oil, conduct surveys, and even carry out shallow drilling on the seabed.

This was among the points made by Jóhannsson in an interview with mbl.is , when asked about the results of a recent Gallup poll conducted for Viðskiptablaðið (The Business Paper), which showed that a large portion of the Icelandic population supports renewed oil exploration within Iceland’s jurisdiction.

He also noted that government policy is not driven by opinion polls.

No recent applications for oil exploration

“What often gets forgotten in this discussion is that under current law, companies and researchers can apply to the Environment and Energy Agency for licenses to explore for oil,” said Jóhannsson.

“There is nothing in the current legal framework that prevents people from conducting land and sea surveys, collecting samples from the upper layers of the seabed, or even doing shallow drilling and similar work.”

He added that to his knowledge, no such applications have been submitted in recent years.

“No reason to submit such a bill”

According to Jóhannsson, the government’s priority remains the development of renewable energy sources — hydro and geothermal — rather than fossil fuels.

“The previous government had specific plans to ban all oil exploration, research, and exploitation permanently and introduced a bill to that effect.

That is not on the agenda of the current government under Kristrún Frostadóttir, and I see no reason to introduce such a bill,” he said.

No Plans to Reopen Licensing for the Dreki Area

The minister said that there have been no plans to reopen licensing rounds for exploration and production in the Dreki area, and no such requests have come across his desk.

“It’s worth remembering how that expedition ended last time. The large international companies returned their licenses, citing low likelihood of finding oil in commercially viable quantities to justify continued research.

One of the Icelandic companies involved went bankrupt, losing billions of ISK. Based on that experience, the venture wasn’t exactly a success, and I haven’t received any proposals concerning oil operations in the Dreki area,” he said.

"Unwise, given how iIt rnded last time"

Economist and investor Heiðar Guðjónsson recently told mbl.is that tax revenues from an oil discovery in the Dreki area would be so substantial that all other taxes in Iceland could be eliminated.

Asked whether he sees this as a realistic possibility, Jóhannsson replied:

“The last time around, large, well-financed international companies invested in oil exploration but ultimately returned their licenses because they considered it unrealistic and not worth the financial effort. They saw too little chance of finding oil in extractable quantities.”

He added that the Environment and Energy Agency has been reviewing all previously collected data from the Dreki area and that a report is likely to be published later this year. “It will be interesting to see the findings,” he said.

“Based on the data currently available, I don’t think it would be responsible for the state to actively promote such an endeavor, especially in light of how it ended last time. But as I said earlier, the laws are clear: anyone can apply for an exploration license and conduct surveys and even shallow drilling on the seabed,” the minister concluded.