The Dragon Area, located in the northeast corner of Iceland's territorial waters, has long been suspected to be rich in oil and natural gas. Last February, The National Energy Authority reported
that Britain's TGS and Norway's Volcanic Basin Petroleum Research found fairly conclusive evidence of the existence of oil.
As billions of barrels of oil are suspected to be in the Arctic, this discovery prompted a heated round of bidding for licences. The Norwegian, Russian and British have all shown an interest in the Dragon Area.
now reports that one Scottish company, Faroe Petroleum, has secured provisional exploration licences for the area.
Chief executive of Faroe Petroleum Graham Stewart told BBC, "We are very pleased to announce our entry into Iceland's offshore, which represents an important extension of our frontier exploration portfolio in the UK west of Shetlands, Norwegian Sea and Norwegian Barents Sea. As with our Norwegian Barents Sea licences, this new Icelandic Jan Mayen Ridge licence has significant hydrocarbon potential, and is located in ice-free waters."
It is unknown how much oil or natural gas is located in the Dragon Area, but a significant reserve discovery could be a boon to Iceland's lagging, albeit recovering, economy.
As international interest in Iceland's oil potential grows, foreign companies are taking a closer look and buying drilling licences.