Oil and Mineral Exploration
The Government of Greenland may grant authorizations for prospecting, exploration, and exploitation; exploitation permits are granted only to companies. Companies must generally be based in Greenland, and the application must document that they have the expertise and financial background for exploitation activities. When a permit is issued, an amount is fixed which the licensee must pay to the Government of Greenland; the amount can be defined as an area, production, or profits tax.
An authorization may also include obligations to use Greenlandic labour or subcontractors and provisions that exploited raw materials are processed in Greenland. Prior to exploitation, a plan must be submitted to and approved by the Government of Greenland. In the approval, Naalakkersuisut determines the amount to be extracted.
Establishment and operation of associated energy and pipeline facilities must also be approved. The Government of Greenland may charge the licensee.
A permit for exploration and exploitation may be granted for up to 10 years or in special cases up to 16 years. A permit is granted by one of several methods, e.g. public tendering, where oil companies can submit applications with information on their expertise, economic background, and procedures with regard to safety, health, and environment.
Underground permissions are granted for a period of up to 50 years. In the license, a charge to the Government of Greenland is set; it can be defined as an area, volume, utilization, or dividend tax.
Small-Scale Permits
Permits for small-scale exploration and exploitation of minerals are only given to individuals and not to companies. Permits are issued only to persons who are permanent residents in Greenland and who have been so for five years up to the application and been liable to tax in that period.
Permits to small-scale exploration with exclusive rights are granted only for areas of 1 sq km2 or less and are given for a period of up to three years. Prospecting under such permits shall be made by the licensee or members of his household; the licensee may, however, apply for a permission to hire up to nine people. Activities may only be carried out by using smaller, handheld, non-mechanical instruments.
Residents and persons in Greenland liable to full taxation can undertake non-commercial collection of loose minerals without permission; processing and sales, however, require permission for small-scale use.
Municipalities and Concrete Companies
Municipalities and concrete companies are allowed to gather and break gravel, stone, and similar materials without permission for road and building materials.
The number of permits for oil exploration and the use of funds in that connection are shown below.
Overview 1
Oil Exploration in Greenland
|
|
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
|
Prospecting permits (active) |
. |
. |
. |
. |
. |
. |
4 |
7 |
9 |
9 |
7 |
11 |
17 |
23 |
27 |
25 |
27 |
|
Exploration permits (granted) |
. |
. |
. |
. |
. |
. |
1 |
1 |
1 |
2 |
2 |
6 |
11 |
13 |
20 |
20 |
20 |
|
Exploration costs in USD million |
. |
. |
. |
. |
. |
. |
0,9 |
2,4 |
2,9 |
2,9 |
1,9 |
9,5 |
115,5 |
102,0 |
501,7 |
823,9 |
... |
Source: The BMP
The number of permits for mineral exploration and the use of funds in that connection are shown in Overview 2.
Overview 2
Mineral Exploration
Source: The BMP
The four current exploitation permits concern the gold mine in Nalunaq, the lead and zinc mine at Maarmorilik, the Malmbjerg project on Jameson Land, and the olivine mine at Fiskefjord.
Economy
In connection with the efforts to attract oil and mineral companies to Greenland, various financial instruments such as corporate and dividend tax, production and / or excess royalty, government participation / profit sharing / production sharing, and work and training commitments are being considered.
In collaboration with IHS Energy and PriceWaterhouseCoopers, a comparison of industry conditions in different countries has been made to find a level for Greenland which makes the country attractive for the oil and minerals industry.