$70 a barrel keeps Faroes dreaming of oil wealth

The scene looks nothing like a Middle East capital: on the outskirts of this sleepy fishing town of 15,000, men mow grass roofs on their houses while sheep roam freely on steep, rocky hills.

Yet Torshavn, the capital of the Faroe Islands, dreams of becoming the Kuwait City of the North — enjoying oil riches that would free these wind-swept North Atlantic volcanic rocks from depending on fish, sheep and ruler Denmark for survival.
Energy companies are the only foreigners who spend big money here, shelling out more than $50 million per well to seek oil and gas under the hard basalt sea floor. With oil prices around $70 per barrel, the expense is justifiable to shareholders, as long as there is oil to be found.

However, several dry wells have tempered oil companies’ initial enthusiasm for exploration here and experts say 2007 could make or break the Faroes’ potential oil fortune.

“An oil find would have a huge impact on Faroese society,” said Wilhelm Petersen, chief executive of Atlantic Petroleum, a small Faroese firm involved in several exploration projects with major oil companies here.

An autonomous Danish territory, home to about 50,000 people and 75,000 sheep, the Faroe Islands lie between Scotland and Iceland. Denmark handles their defense and foreign policy and pays a yearly grant that helps keep the independence movement muffled.

In 2000, the first round of exploration licensing aroused great expectations as 12 oil companies including Shell, BP and Chevron snapped up the rights to drill in waters around the Faroes.

Reuters