OSLO Statoil expects oil prices to remain volatile in the short term and to rise over the long term as the production capacity of OPEC countries remains limited, the firm's chief executive said on Wednesday.
At a meeting in Vienna last week, OPEC failed to agree on a production increase sought by consuming countries and leading exporter Saudi Arabia after Iran and other producers said they feared it could cause prices to tumble.
"We see that OPEC's spare capacity is at this stage quite low, so prices could be relatively volatile," Helge Lund told Reuters.
"Over the long term, with reasonably normal (economic) growth rates, we see there will be a continuous (upward) pressure on oil prices, given the relatively limited spare capacity in OPEC," he said in an interview.
Lund declined to predict what price a barrel of oil could reach over the coming months. A barrel of Brent crude for July cost $118 at 1259 GMT (8:59 a.m. EDT).
Iceland's energy ministry told Reuters on Wednesday it was eyeing a tender of oil and gas licenses off its coast in upcoming months to encourage exploration for hydrocarbons. Lund said Statoil will "probably look at it.
"We are clearly looking at areas in the vicinity of Norway," he said.
The Arctic could hold some 90 billion barrels of oil equivalent, 84 percent of its offshore, the U.S. Geological Survey estimated in 2008.
British oil firm Cairn Energy is attempting to drill for oil off Greenland but faces opposition from environmental groups such as Greenpeace.
Lund said Statoil would not conduct any drilling in 2011 off Greenland, where it holds stakes in two licenses, together with Royal Dutch Shell and Gdf Suez.
The firm is also part of the Kanumas Group, a group of companies that includes ExxonMobil, Chevron, BP and Shell, which conduct seismic surveys off Greenland.
Members of the group have preferential rights for the upcoming licensing round off Greenland in 2012-2013.
"We constantly look at high-impact areas that are associated with our core technologies and operational experience and I think Greenland is one such area where we think we could be a good partner," Lund said.
"We are already positioned for the next licensing round and we will of course look at opportunities then, in 2012-2013."
Also in the Arctic, Norway in July will start collecting seismic data in a newly delineated region of the Barents Sea that is half the size of Germany, after a new Norwegian-Russian maritime border came into force.
Statoil's head of exploration and production in Norway, Oeystein Michelsen, said the firm was hoping for a fast-track impact assessment of the region so it could start exploring the area.
"The interest from the (Norwegian) government side is huge and it looks like they want to get started as soon as possible," Michelsen told Reuters.
"We are hoping very strongly that an impact assessment study could be done as soon as possible. Maybe it is possible in 2014, but we don't know."
(Additional reporting by Henrik Stoelen in Oslo; editing by Keiron Henderson)