Arctic Economics

Greenland's home rule government and the government of Denmark have signed an agreement dealing with relations between the two countries, and outlining an approach to splitting income from the oil fields that are likely to be found off Greenland's coast: Denmark, Greenland Divide Arctic Island's Future Oil Income (Christian Wienberg, Bloomberg, June 13).

Oil income will be split as follows:

Under today's agreement, Greenland will receive the first 75 million kroner ($15 million) generated from oil production, while the two governments will split additional proceeds until Denmark has received an equivalent of the 3.2 billion kroner it pays in annual subsidies to the Arctic Island. Greenland will receive all additional proceeds after that.

In addition:

``This agreement recognizes us as a people, it makes Greenlandic our official language and it gives us our right to our underground resources,'' Enoksen said at a Copenhagen press conference after talks with Rasmussen.

The decision on the oil income split is not of academic interest:

Oil companies have begun looking for crude oil deposits off Greenland's west coast. The island's government hasn't made an exact estimate of the amount of oil in the region other than to say it's ``equal to North Sea reserves.'' The North Sea's past production and future reserves totals more than 50 billion barrels of crude oil....

Last October, Greenland's government awarded licenses to explorers including Chevron Corp., Exxon Mobil Corp. and Husky Energy Inc. The companies will now collect seismic data to determine the best drilling locations.