UPDATE 1-Norway gives oil and gas firms first chance to drill in its east Arctic

Wed Aug 28, 2013 8:57am EDT

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* Firms have until Jan. 14 to nominate areas to explore

* Only limited number of blocks likely in eastern Barents

* Previous round included 20 blocks awarded in Arctic

OSLO, Aug 28 (Reuters) - Norway invited oil and gas firms on Wednesday to bid for the first licences to drill in the eastern part of its Arctic waters, three years after it settled a border dispute with Russia.

With oil production on course to fall to a 25-year low this year, Norway is looking to tap reserves further into the Arctic as it runs out of prospects in the North Sea.

Oil and gas firms will have until Jan. 14 to nominate blocks they want to drill, including for the first time in the eastern Barents Sea. The area, as big as Switzerland, is estimated to hold about 1.9 billion barrels of oil equivalent, of which 15 percent is oil, the Norwegian Petroleum Directorate (NPD) said.

Norway and Russia ended a 40-year old dispute over their maritime borders in 2010 but some fields are likely to lie on the border, complicating eventual production, the NPD said.

The government cautioned that only a limited number of licences are likely to be offered in the coveted eastern Barents, as it wants to build up activity gradually and efficiently. It aims to award the licences in the second quarter of 2015.

In its previous round, Norway earlier this year awarded 24 licences to energy firms, including 20 in the western parts of the Barents, where some big discoveries have already been made.

Norway's Statoil was among the biggest winners, taking stakes in seven licences and winning the right to operate three of them, while Italy's Eni also won three operatorships. Russia's Lukoil and Rosneft, newcomers in Norway, also won stakes.

Licences were also awarded to international majors Royal Dutch Shell, BP, ConocoPhillips and Total.

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