FX.co ★ Major oil companies abandon their Arctic drilling licenses

A number of large oil companies, including Royal Dutch Shell, ConocoPhillips and Statoil, have decided to relinquish their leases purchased from the US government to explore US federal Arctic waters for oil and gas. This was reported by Bloomberg on Tuesday, May 10. The overall cost of the drilling licenses came up to $2.5 billion.
The current situation in the global market forces oil companies to reduce their spending. Peter Kiernan, the leading energy analyst at The Economist Intelligence Unit, was quoted by the news agency as saying, "Arctic exploration has been put back several years, given the low oil price environment, the significant cost involved in exploration and the environmental risks that it entails."
Major oil players have recently abandoned their rights for drilling oil and gas across an area of 2.2 million acres (around 11.3 thousand square kilometers) in the US Arctic, or almost 80% of the leases they bought at an auction held by the US government in 2008. Back then, the oil giants spent more than $2.6 billion to obtain drilling licenses that covered 2.8 million acres in the Chukchi Sea.
Bloomberg reported that the news came as a hard blow for Alaskan authorities as the state receives the bulk of its revenue from oil exploration. Alaska’s governor Bill Walker has said in a statement that it is “absolutely critical that we find safe and responsible opportunities to drill for more oil both onshore and offshore in Alaska,” adding that Arctic exploration is of enormous significance for US energy security, jobs, and government revenue.