REPORTS OF INTERNATIONAL

ARBITRAL AWARDS

RECUEIL DES SENTENCES

ARBITRALES

Conciliation Commission on the Continental Shelf area between Iceland and Jan
Mayen: Report and recommendations to the governments of Iceland and
Norway, decision of June 1981

June 1981

VOLUME XXVII pp.1-34

NATIONS UNIES - UNITED NATIONS

Copyright (c) 2008
 PART I

_______________

Conciliation Commission on the Continental

Shelf area between Iceland and Jan Mayen:
Report and recommendations to the
governments of Iceland and Norway

Decision of June 1981

_______________

Commission de conciliation sur le plateau

continental entre l’Islande et Jan Mayen: Rapport
et recommandations aux gouvernements
de l’Islande et de la Norvège

Décision de juin 1981

CONCILIATION COMMISSION ON THE CONTINENTAL SHELF AREA
BETWEEN ICELAND AND JAN MAYEN: REPORT AND
RECOMMENDATIONS TO THE GOVERNMENTS OF ICELAND AND
NORWAY, DECISION OF JUNE 1981

COMMISSION DE CONCILIATION SUR LE PLATEAU CONTINENTAL

ENTRE L’ISLANDE ET JAN MAYEN: RAPPORT ET RECOMMAN-
DATIONS AUX GOUVERNEMENTS DE L’ISLANDE ET DE LA
NORVÈGE, DÉCISION DE JUIN 1981

Mandate of the Commission–article 9 of the Agreement between Iceland and Norway

of May 28, 1980, concerning fishery and continental shelf questions–to make
recommendations with regard to the dividing line for the continental shelf area–claim by
one Party to a continental shelf area extending beyond the 200-mile economic zone–to take
into account the Party’s strong economic interests in these sea areas, the existing
geographical and geological factors and other special circumstances–recommendations must
be unanimous and are not binding on the Parties–reasonable regard to be paid by the Parties
to recommendations as a useful basis for the resolution of the outstanding issues during the
negotiation following the conciliation.
Rules of procedure–Commission adopts its own rules of procedure–unanimous non-
binding recommendations to be presented to the Parties within five months of the
appointment of the Commission–request of written and/or oral pleadings from the two
Parties in case of unanimous recommendations by the Commission would not serve a useful
purpose since the two national members of the Commission had participated in all previous
negotiations.
Applicable law–Commission shall not act as a court of law–examination by the
Commission of State practice and court decisions so as to ascertain possible guidelines for
the practicable and equitable solution of the questions concerned–taking into account the
provisions of the draft Convention on the Law of the Sea–draft texts influenced by the
decisions of the International Court of Justice (ICJ) in the North Sea Continental Shelf cases.
Status of Islands–reference to the draft Convention on the Law of the Sea–article 121
of the draft Convention reflecting the present status of international law on the subject in the
opinion of the Commission–Island entitled to a territorial sea, an economic zone and a
continental shelf–applicability of the provisions of the draft Convention concerning
delimitation of the exclusive economic zone (article 74) and of the continental shelf (article
83) between States with opposite or adjacent coasts.
Delimitation–to be effected by agreement between the Parties in conformity with
international law: in accordance with equitable principles, employing the median or
equidistance line, where appropriate, and taking account of all circumstances prevailing in
the area concerned–agreement of May 28, 1980, implicitly recognizing that Iceland shall
have a full economic zone of 200 nautical miles in areas where the distance between Iceland
and Jan Mayen is less than 400 miles.
Methods of delimitation of the dividing line for the shelf area–vary in accordance with
the circumstances of the case–inapplicability of the natural prolongation concept to the
present case–determination of a certain proportionality by dividing the area concerned
between the Parties on the basis of distance and other relevant factors–wide variety of
4 ICELAND/NORWAY

solutions used in State practice in regard to drawing boundary lines–frequent use of median
line as an equitable solution–account to be taken of special circumstances in order to
accommodate the relevant factors of each case–possibility of a “trade-off” by ignoring the
islands on both sides when both coastal States have islands along their coasts–application of
the “enclave principle” to islands situated within the 200-mile economic zone of another
State in order to give them territorial seas–use of agreements for joint development and
cooperation in overlapping areas of continental shelves between neighboring countries.
Special circumstances–dependency of the Party on imports of hydrocarbon products–
shelf surrounding the Party having very low hydrocarbon potential–existence of a high
geological risk in the relevant area–difficulties for exploration and commercial use.
Approach to be used by the Commission in formulating relevant recommendations–
promotion of cooperation and friendly relations between the Parties–taking into account
both the fact that the bilateral agreement on the Party’s 200-mile economic zone has already
given the Party a considerable area beyond the median line and the fact that the
uncertainties with respect to the resource potential of the area create a need for further
research and exploration–proposition of the adoption of a joint development agreement
covering substantially all of the area defined by the Commission and offering any
significant prospect of hydrocarbon production, based on the principles recommended by
the Commission.

Mandat de la Commission–article 9 de l’Accord du 28 mai 1980 entre l’Islande et la

Norvège relatif à la controverse sur la pêcherie et le plateau continental–faire des
recommandations à propos de la ligne de division de la zone du plateau continental–
réclamation par l’une des Parties d’un plateau continental s’étendant au-delà de la zone
économique de 200 miles nautiques–prise en compte des intérêts économiques importants
de l’une des Parties dans ces zones maritimes, des facteurs géographiques et géologiques
ainsi que des autres circonstances spéciales–recommandations devant être prises à
l’unanimité mais non contraignantes pour les Parties–Parties devant raisonnablement tenir
compte de ces recommandations comme base utile à la résolution des problèmes en suspens
lors de la négociation ayant lieu après la conciliation.
Règles de procédure–la Commission adopte ses propres règles de procédure–des
recommandations non contraignantes prises à l’unanimité doivent être présentées aux
Parties dans les cinq mois suivant l’établissement de la Commission–inutilité de demander
des plaidoiries écrites et/ou orales aux deux Parties en cas de recommandations unanimes de
la part de la Commission, du fait de la participation des membres nationaux de la
Commission à toutes les négociations antérieures.
Droit applicable–la Commission ne doit pas agir comme une cour de justice–examen
par la Commission de la pratique étatique et des décisions judiciaires afin de déterminer les
grandes lignes d’une solution pratique et équitable aux problèmes en question–prise en
compte du projet de Convention sur le droit de la mer–projet de texte influencé par les
décisions de la Cour internationale de Justice (CIJ) dans les affaires relatives au Plateau
continental de la Mer du Nord.
Statut des îles–référence au projet de Convention sur le droit de la mer–article 121 du
projet de Convention reflétant le statut contemporain du droit international sur le sujet, selon
la Commission–Iles ayant droit à une mer territoriale, une zone économique et un plateau
continental–applicabilité des dispositions du projet de Convention relatives à la délimitation
de la zone économique exclusive (article 74) et du plateau continental (article 83) entre les
États ayant des côtes opposées ou adjacentes.
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 5

Délimitation–devant être effectuée par accord entre les Parties conformément au droit
international : selon des principes équitables, en employant la ligne médiane ou équidistante,
lorsqu’approprié, et prenant en compte toutes les circonstances prévalant dans la zone
concernée–accord du 28 mai 1980 reconnaissant implicitement que l’Islande devrait avoir
une zone économique intégrale de 200 miles nautiques dans les régions où la distance entre
l’Islande et Jan Mayen est inférieure à 400 miles nautiques.
Méthodes de délimitation de la ligne de démarcation du plateau continental–variation
selon les circonstances de l’espèce–inapplicabilité du concept de prolongement naturel dans
le cas présent–détermination d’une certaine proportionnalité en divisant la zone concernée
entre les Parties sur la base de la distance et d’autres facteurs pertinents–grande variété de
solutions utilisées dans la pratique des États pour tracer les lignes frontières–recours
fréquent à la ligne médiane comme solution équitable–prise en compte des circonstances
spéciales afin de s’accommoder des facteurs pertinents à chaque cas–possibilité de
compromis en ignorant les îles de chaque côté lorsque les deux États côtiers disposent d’îles
le long de leurs côtes respectives–application du principe d’enclavement pour les îles situées
dans les 200 miles de la zone économique exclusive d’un autre État afin de leur accorder
une mer territoriale–recours à des accords pour la coopération et le développement conjoint
dans les zones de chevauchement du plateau continental entre États voisins.
Circonstances spéciales–dépendance de l’une des Parties aux importations de produits
hydrocarbures–plateau entourant l’une des Parties ayant très peu de potentiel en
hydrocarbures–existence d’un très haut risque géologique dans la zone en question–
difficultés d’exploration et d’utilisation commerciale.
Approche devant être employée par la Commission pour formuler les recomman-
dations pertinentes–promotion de la coopération et des relations amicales entre les Parties–
prise en compte du fait que l’accord bilatéral sur la zone économique de 200 miles de l’une
des Parties a déjà accordé à cette Partie une zone considérable allant au-delà de la ligne
médiane, ainsi que du fait que les incertitudes relatives au potentiel de ressources
hydrocarbures de la zone entrainent un besoin pour des recherches et des explorations
supplémentaires–proposition d’adopter un accord de développement conjoint couvrant
substantiellement l’intégralité de la zone définie par la Commission et offrant quelque
perspective significative de production hydrocarbure, et fondé sur les principes
recommandés par la Commission.

*****
6 ICELAND/NORWAY

REPORT AND RECOMMENDATIONS TO THE GOVERNMENTS

OF ICELAND AND NORWAY OF THE CONCILIATION
COMMISSION ON THE CONTINENTAL SHELF AREA
BETWEEN ICELAND AND JAN MAYEN ∗

Commission
The Honorable Elliot L. Richardson, Chairman
H.E. Hans G. Andersen, Conciliator for Iceland
H.E. Jens Evensen, Conciliator for Norway
Washington, D.C
1981

Outline
Section Page
I The Agreement between Iceland and Norway of
May 28, 1980. 7
II Establishment and Work of the Conciliation
Commission. 8
III The Geography and Geology of Jan Mayen. 9
IV Status of Islands. 10
V Report of Geologists of December 16, 1980. 11
VI Possible Methods and Approaches. 22
VII Summary of Recommendations. 32

Maps
Figure 1 Bathymetry - Jan Mayen Ridge, […] ∗∗
Figure 2 Jan Mayen Ridge Area - Geological Provinces, […] ∗∗∗
Figure 3 Area subject to Joint Development, […] ∗∗∗∗

__________
∗
Secretariat note: This text incorporates minor, non-substantive corrections in the text of the
Report.
∗∗
Secretariat note: see Figure 1 in the front pocket of this volume.
∗∗∗
Secretariat note: see Figure 2 in the front pocket of this volume.
∗∗∗∗
Secretariat note: see Figure 3 in the front pocket of this volume.
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 7

Section I

BRIEF EXAMINATION OF THE AGREEMENT BETWEEN

ICELAND AND NORWAY OF MAY 28, 1980.

On May 28, 1980 the Governments of Iceland and Norway concluded an

Agreement concerning fishery and continental shelf questions. Articles 1-8 of
this Agreement deal with fishery questions.
In the preamble of the Agreement it was recognized that Iceland should
have an economic zone of 200 miles pursuant to the Icelandic Law on
Territorial Sea, Continental Shelf and Economic Zone of June 1, 1979. The
shortest distance between Iceland and Jan Mayen is about 290 nautical miles.
During the negotiations of the aforementioned agreement the Icelandic
Government advanced the view that Iceland was entitled to a continental shelf
area extending beyond the 200-mile economic zone. Since no agreement was
reached on this question during the negotiations, the parties agreed to refer it
to a Conciliation Commission to be established in accordance with Article 9
of the agreement.
Article 9 reads:
“The question of the dividing line for the shelf in the area between Iceland and
Jan Mayen shall be the subject of continued negotiations.
For this purpose the Parties agree to appoint at the earliest opportunity a
Conciliation Commission composed of three members, of which each Party
appoints one national member. The Chairman of the Commission shall be
appointed by the Parties jointly.
The Commission shall have as its mandate the submission of recommendations
with regard to the dividing line for the shelf area between Iceland and Jan Mayen.
In preparing such recommendations the Commission shall take into account
Iceland’s strong economic interests in these sea areas, the existing geographical
and geological factors and other special circumstances.
The Commission shall adopt its own rules of procedure. The unanimous
recommendations of the Commission shall be submitted to the two Governments
at the earliest opportunity. The parties envisage the presentation of the
recommendations within five months of the appointment of the Commission.
These recommendations of the Commission are not binding on the Parties; but
during their further negotiations the Parties will pay reasonable regard to them.”
8 ICELAND/NORWAY

Section II

ESTABLISHMENT AND WORK OF THE

CONCILIATION COMMISSION

In accordance with Article 9 of the Agreement the Government of Iceland

appointed Ambassador Hans G. Andersen, Chairman of the Delegation of
Iceland to the Third United Nations Conference of the Law of the Sea, as its
national member. The Government of Norway appointed Ambasador Jens
Evensen, Chairman of the Delegation of Norway to the Conference.
The parties agreed jointly to appoint Ambassador Elliot Richardson, then
Chairman of the Delegation of the United States of America to the Conference
on the Law of the Sea, as Chairman of the Icelandic-Norwegian Conciliation
Commission.
The Commission was duly established on August 16, 1980.
The mandate of the Commission, according to Article 9, paragraph 3, is
to make recommendations with regard to the dividing line for the shelf area
between Iceland and Jan Mayen. In preparing such recommendations the
Commission shall take into account Iceland’s strong economic interests in
these sea areas, the existing geographical and geological factors and other
special circumstances.
It follows from Article 9 that the recommendations of the Commission
to be submitted to the two Governments must be unanimous. The
recommendations of the Commission are not binding on the Parties. But
the Agreement stipulates that during the negotiation following such
recommendations the Parties “will pay reasonable regard to them.” During its
work the Conciliation Commission has discussed the various aspects of the
problems involved. It is hoped that the recommendations submitted will serve
as a useful basis for the solution of the outstanding questions.
The Conciliation Commission held a first informal meeting to plan its
work in Geneva in the period August 19-27, 1980. The first formal meeting
was convened in Washington in the period 27-29 October, 1980. In order to
obtain the available information concerning the geology of the continental
shelf areas in question, including the probability of mineral resources in the
seabed, a meeting was convened at the Lamont-Doherty Geological
Observatory of Columbia University, New York, in the period 8-10 December,
1980. Present at the meeting were international geologists and geophysicists
who had conducted research in the area. The Commission held additional
meetings in Washington, D.C. during 11-12 December, 1980.
The two national members of the Commission, Ambassadors Andersen
and Evensen, met in Geneva in the period 8-15 February, 1981. Thereafter,
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 9

the Conciliation Commission had a meeting in London in the period 16-17

February, 1981.
Further meetings were held in the period: March 3-4, 1981 in New York.
At its first formal meeting in Washington in the period 27-29 October,
1980 the Commission decided that since the purpose of the Conciliation
Commission was to submit unanimous recommendations and since the two
national members had participated in all previous diplomatic negotiations, it
would not serve a useful purpose to request written and/or oral pleadings from
the two parties.

Section III

JAN MAYEN: GEOGRAPHY AND GEOLOGY

Jan Mayen is an island situated at the Northern end of the Jan Mayen
Ridge between:
70° 49’ N
71° 10’ N
7° 53’ W
9° 05’ W
The island is elongated along a NE-SW axis. It is about 53 km long and
has a maximum width in the Northern part of 15-20 km. Its area is 373 km2
which is about the same size as Streymoy, the largest of the Faroe Islands.
Distances to other geographic locations are as follows:
Tromsø 1018 km (550 n.m.)
Iceland 540 ” (292 ” )
Greenland 455 ” (246 ” )
Longyearbyen on Svalbard 966 ” (522 ” )
The island is characterized by large mountains. The northern part includes
the volcano Beerensburg, 2277 m, the highest mountain on the island. The
central part is relatively flat with low elevations. The southern part is
dominated by a mountain plateau with maximum elevation of 769 m
(Rudolftoppen). The coast is rather steep, although there are areas of extensive
flat shorelines with sand and gravel.
Jan Mayen is an entirely volcanic island. It was formed during the last
10 -12 million years. The rocks are lava (alkalibasalt) and other volcanic
material. The island is volcanically active today, with frequent earthquakes.
The most recent volcanic eruption was in 1970, when lava, ash, smoke and
steam flowed out through a 6 km long fracture on the northeastern side of
10 ICELAND/NORWAY

Beerensburg. The lava flowed to the coast where a coastal terrace of 4 km2
was built. Volcanic eruptions have also been reported by whalers in 1732
and 1818.
The Norwegian Meteorological Institute established a meteorological
station on Jan Mayen in 1912. The station has been permanently staffed since
that time except for one year when the Second World War broke out. Several
other permanent stations have been added since that time for LORAN
A and C, CONSOL, Coast-radio, etc. Most of these stations are under the
administration of the Ministry of Defense. Between thirty and forty people
live throughout the winter on the eastern coast in the central part of the island.
This is also where the stations and the airport are located. Roads connect the
installations and living quarters.

Section IV

STATUS OF ISLANDS

Article 121 of the Draft Convention on the Law of the Sea (Informal Text)
of August 27, 1980 reads as follows:

Article 121
Regime of Islands
1. An island is a naturally formed area of land surrounded by water, which is
above water at high tide.
2. Except as provided for in paragraph 3, the territorial sea, the contiguous zone,
the exclusive economic zone and the continental shelf of an island are determined
in accordance with the provisions of this Convention applicable to other land
territory.
3. Rocks which cannot sustain human habitation or economic life of their own,
shall have no exclusive economic zone or continental shelf.

In the opinion of the Conciliation Commission this article reflects the

present status of international law on this subject. It follows from the brief
description of Jan Mayen in Section III of this report that Jan Mayen must be
considered as an island. Paragraphs 1 and 2 of Article 121 are thus applicable
to it.
Therefore, Jan Mayen is entitled to a territorial sea, an economic zone and
a continental shelf. On the other hand, it must be kept in mind that Articles 74
and 83 concerning delimitation are also applicable. The first paragraphs of
these articles read as follows:
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 11

Article 74
Delimitation of the exclusive economic zone between
States with opposite or adjacent coasts

1. The delimitation of the exclusive economic zone between States with

opposite or adjacent coasts shall be effected by agreement in conformity with
international law. Such an agreement shall be in accordance with equitable
principles, employing the median or equidistance line, where appropriate, and
taking account of all circumstances prevailing in the area concerned.

Article 83
Delimitation of the continental shelf between
States with opposite or adjacent coasts

1. The delimitation of the continental shelf between States with opposite or

adjacent coasts shall be effected by agreement in conformity with international
law. Such an agreement shall be in accordance with equitable principles,
employing the median or equidistance line, where appropriate, and taking account
of all circumstances prevailing in the area concerned.
According to these provisions such delimitation shall be effected
by agreement between the parties in conformity with international law. The
parties have concluded such agreement on May 28, 1980 implicitly
recognizing that Iceland shall have a full economic zone of 200 nautical miles
in areas where the distance between Iceland and Jan Mayen is less than 400
miles. The agreement also provides that Norway will establish a fishing zone
around Jan Mayen. Such a zone of 200 nautical miles was established around
Jan Mayen by Norwegian Royal Decree of May 23, 1980, with effect from
May 29, 1980. The Royal Decree provides that the boundaries with
neighboring countries shall be effected by agreement.
The Conciliation Commission will consider the continental shelf
problems involved in the remaining sections of this report.

Section V

REPORT OF GEOLOGISTS OF 16 DECEMBER, 1980

As mentioned in Section II, the Conciliation Commission made

arrangements to obtain a geological report regarding the continental shelf area
between Jan Mayen and Iceland.
The Conciliation Commission considers it appropriate to reproduce the
report in its entirety together with the maps prepared by the geological experts.
The report follows.
12 ICELAND/NORWAY

THE AREA BETWEEN JAN MAYEN AND

EASTERN ICELAND – A GEOLOGICAL REPORT

Prepared at a workshop held at Lamont-Doherty Geological Observatory,

Palisades, New York, USA, December 8 to 10, 1980.
Workshop participants:
Dr. Manik Talwani (Lamont-Doherty Geological Observatory of
Columbia University, USA)
Dr. Karl Hinz (Bundesanstalt für Geowissenschaften und Rohstoffe,
Federal Republic of Germany)
Dr. Lucien Montadert (Institut Francais du Pétrole)
Dr. Olav Eldholm (University of Oslo, Norway)
Mr. E. Bergsager (Norwegian Petroleum Directorate)
Dr. Gudmundur Palmason (National Energy Authority, Iceland)
Dr. Lewis Alexander (Geographer of the United States) Dr. N. Terence
Edgar (United States Geological Survey)
Mr. John Mutter, Rapporteur (Lamont-Doherty Geological Observatory
of Columbia University, USA)

Table of Contents

Chapter

Abstract
Scope and Purpose of Report
Nomenclature Regarding Jan Mayen Ridge
Evolution and Subsurface Geology of the Jan Mayen Ridge Area
Jan Mayen Ridge as a “Natural Prolongation” of Jan Mayen or Iceland
Resource Potential of the Jan Mayen Ridge Area
References
Sources of Data
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 13

THE AREA BETWEEN JAN MAYEN AND

EASTERN ICELAND – A GEOLOGICAL REPORT

Abstract

This report has two principal purposes:

(1) to examine how the Jan Mayen Ridge, which is the most prominent
feature in this region containing sedimentary rocks, is related
morphologically and geologically to the island of Jan Mayen and to
Iceland.
(2) to examine existing geological and geophysical data with a view
toward obtaining the distribution of possible prospective areas for
hydrocarbons in the region lying between Jan Mayen and eastern Iceland.
The Jan Mayen Ridge is a roughly north-south trending feature with
water depths between 200 m and 1600 m (Figure 1). It is subdivided by a
depression, situated between latitudes 68° and 69°N into a northern plateau-
like area and a southern zone. Although the ridge is not continuous through
the entire area lying between Jan Mayen and eastern Iceland, the region is
referred to as the “Jan Mayen Ridge Area” in this report.
The concept of natural prolongation can be considered in two different
senses, morphological and geological. Morphologically the northern part of
Jan Mayen Ridge can be considered a southward extension from the shelf 1 of
Jan Mayen. On the other hand, Jan Mayen Ridge cannot morphologically be
considered an extension from the Icelandic shelf.
However, geologically Jan Mayen Ridge is a microcontinent that predates
both Jan Mayen and Iceland which are composed of younger volcanics;
therefore the ridge is not considered a natural geological prolongation of
either Jan Mayen or Iceland.
The hydrocarbon potential of the northern part of the Jan Mayen Ridge,
situated north of the oblique depression (see Figure 1), is regarded as more
favorable mainly because it has a larger areal extent than the southern part.
It should be stated that the southern part is less understood and appears to be
more complex than the northern part. However, considered in comparison
with known oil-producing areas worldwide, the overall potential cannot be
considered good, based on the existing fragmentary data. We emphasize that
detailed further exploration could change this assessment.

__________
1
Shelf here defined in its usual scientific sense.
14 ICELAND/NORWAY

THE AREA BETWEEN JAN MAYEN AND

EASTERN ICELAND–A GEOLOGICAL REPORT

Scope and Purpose of Report

This report has two principal purposes:

(1) to examine how the Jan Mayen Ridge, which is the most prominent
feature in this region containing sedimentary rocks, is related
morphologically and geologically to the island of Jan Mayen and Iceland.
(2) to examine existing geological and geophysical data with a view
towards obtaining the distribution of possible prospective areas for
hydrocarbons in the region lying between Jan Mayen and eastern Iceland.

Nomenclature Regarding Jan Mayen Ridge

The Jan Mayen Ridge is a roughly north-south trending feature with

water depths between 200 m and 1600 m (Figure 1). It is subdivided by a
depression, situated between latitudes 68° and 69°N into a northern plateau-
like area and a southern zone. Although the ridge is not continuous through
the entire area lying between Jan Mayen and eastern Iceland, the region is
referred to as the “Jan Mayen Ridge Area” in this report.

Evolution and Subsurface Geology of the Jan Mayen Ridge Area

It is generally agreed that the Jan Mayen Ridge Area has, geologically
speaking, evolved in a unique way. Both the island of Jan Mayen, which lies
north of the Jan Mayen Ridge, and Iceland, which lies to the southwest, are
composed of relatively young rocks of volcanic origin. Even though both are
islands, thus lying above sea level, they came into existence during the
opening of the Norwegian Sea and are considered oceanic structures. The
Jan Mayen Ridge, on the other hand, lies below sea level but is considered
largely a continental sliver and is believed to contain rocks whose age
predates the opening of the Norwegian Sea.
Two important geological events are responsible for the present location
and configuration of the Jan Mayen Ridge. The first was the opening of the
Norway Basin (to the east of Jan Mayen Ridge) which represents the first
stage in the opening of the Norwegian Sea by the splitting apart of Greenland
and Norway. The split started in Early Eocene (about 55 m.y. before present)
and continued until the Lower Oligocene (27 m.y. before present) and
culminated in the opening of the Norway Basin. About 27 m.y. ago the axial
ridge at which the opening was actively taking place became extinct and the
axis of opening “jumped” westwards. The opening at the new ridge axis was
effective in separating a thin, long sliver which was previously a part of
Greenland away from it. This long sliver is the Jan Mayen Ridge. For reasons
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 15

that are not understood, this piece of continent did not stay above sea level.
(It is in fact quite likely that for most of its history it was below sea level.
In Mesozoic times it was part of a shallow sedimentary basin and later in the
Early Tertiary a part of Greenland’s continental margin.) At any rate, after
being split away from Greenland it subsided and did so in somewhat irregular
fashion. The northern part subsided less and stayed relatively shallow; it also
remained a single block-like feature while the deeper southern part broke into
several fragments that subsided more deeply.
Sedimentary patterns changed after each episode of opening giving rise to
“break up unconformities” which can be detected by seismic reflection
profiling. Two important unconformities are readily seen in the seismic
records. The lower one, termed “O”, is believed to be associated with the first
episode of opening (that started 55 m.y., ago). It has not been reached by
drilling, and the estimate of its age is based in part on the velocities of seismic
waves in the underlying rocks and partly on its juxtaposition with basalt
outpourings associated with early opening. The second unconformity termed
“A” is believed to be associated with the second episode of opening
(that started about 27 m.y. ago). It has been reached by drilling. Rocks above
the unconformity are Miocene and younger (less than 15 m.y.) in age and
below it are Oligocene-Eocene (35 to 50 m. yrs.) in age.
The rocks below “O” are “pre-opening” in age and for this reason have
been used to characterize and define the continental character of the
Jan Mayen Ridge. We note, however, that these rocks are unsampled and so
there is no direct evidence of continental rocks. Horizon “O” can, however, be
identified on seismic reflection profiles. In Figure 2 areas where horizon “O”
forms a ridge are colored yellow, and where they form a depression or a ridge
which does not rise above the seafloor are show in orange.
The process of initial openings (first phase as well as the second phase)
was assocated with the extrusion of large amounts of lava. The lava flows
covered the newly created ocean floor, but in some cases they may also have
covered the foundered continental fragments. Thus there is some uncertainty
in the areas covered by lava flows (which solidify to form basaltic rocks)
whether the underlying rocks are oceanic or continental. Where independent
evidence from lineated magnetic anomalies 2 assures us that the areas are
oceanic, the map has been colored red; the areas where there is uncertainty
about the underlying rocks have been colored blue or purple. The purple areas
represent lava flows associated with the first phase of opening. The surface of
these flows is relatively rugged, and they lie deeper than the lava flows
emplaced during the second stage of opening which generally have a
smoother surface, and the corresponding areas of the map have been colored
blue. Lava flows in both areas (where the underlying rocks are uncertain in
character) as well as in the region of demonstrated oceanic crust appear as a
__________
2
Such anomalies are known to be created during the active seafloor spreading phase of an
ocean basin.
16 ICELAND/NORWAY

near ubiquitous seismically “opaque” layer. This layer is found everywhere

except in the area where the continental fragments clearly interrupt this layer.
(That the seismically “opaque” layer in this area is indeed basalt has been
unequivocably demonstrated by the recovering of core samples by drilling.)
It is particularly difficult to define the total sediment thickness in the
Jan Mayen Ridge Area. There are two main reasons for the difficulty. One is
that sediments might exist below the extensive basalt flows in the area –
seismic methods used to date have not penetrated below the basalt (as stated
earlier basalt flows might in places cover sedimentary rocks near the edges of
the continental blocks). Secondly, the base of the sedimentary column has not
been reached by seismic reflection work even in areas not covered by basalt.
The uncertainties in sediment thickness, therefore, mainly pertain below
horizon “O” and the basalts. Only in a small area beneath the eastern flank of
the Jan Mayen Ridge has a mappable stratified sequence been recognized
below “O” on seismic profiles. The thickness of sediment lying above “O”
and the basalts is on the other hand relatively well mapped. Although the
thickness of post-“O” and post-basalt sediment generally does not exceed
about 2.5 km (Figure 2), in some areas, particularly on the east flank of the
Jan Mayen Ridge, the thickness might be as much as 4 km.
In summary, the Jan Mayen Ridge Area is geologically complex,
consisting of (Figure 2):
Areas underlain by crust that is demonstrably oceanic (red),
Areas that contain, at depth, rocks believed to be continental in origin
(yellow and orange), and
Areas where the lava flows obscure the nature of the underlying rocks
(blue and purple).
Areas where seismic data are very sparse or for other reasons do not
provide information to place them in one of the above groups are left white.
While the above description of the Jan Mayen Ridge Area is agreed to
represent the consensus of geologic opinion, we note that some scientists who
have made surveys in the region consider that a much greater area of the
seafloor in the region is of continental origin.

Jan Mayen Ridge as a “Natural Prolongation”

of Jan Mayen or Iceland

The concept of natural prolongation can be considered in two different

senses, morphological and geological. Morphologically the northern part of
Jan Mayen Ridge can be considered a southward extension from the shelf 3 of
Jan Mayen. On the other hand, Jan Mayen. Ridge cannot morphologically be
considered an extension from the Icelandic shelf.
__________
3
Shelf here defined in its ususal scientific sense.
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 17

However, geologically Jan Mayen Ridge is a microcontinent that predates

both Jan Mayen and Iceland which are composed of younger volcanics;
therefore the ridge is not considered a natural geological prolongation of
either Jan Mayen or Iceland.

Resource Potential of the Jan Mayen Ridge Area

We take into consideration here only the possible potential for

hydrocarbons. The present knowledge does not indicate other resources.
No indication for the generation of metalliferous deposits or manganese
nodules has been reported yet from the active or extinct oceanic ridges or
fracture zones (Figure 1), but we will not completely rule out the possibility of
the generation of such deposits in the above-mentioned areas.
In the Jan Mayen Ridge Area the geophysical surveys have only been of a
reconnaissance nature-they have not been of the detailed nature carried out for
pinpointing structures for the purpose of drilling for oil or gas. Furthermore,
drilling in this area has been carried out only for scientific purposes.
The number of drill holes is very few, and they have not been extended to
depths where oil-bearing horizons might possibly exist.
JOIDES/DSDP scientific drilling has been carried out at four sites – 346,
347, 349, and 350 in the Jan Mayen Ridge Area. At sites 346, 347, and 349
the drill penetrated through the horizon A (which is the upper one of the two
major unconformities in the Jan Mayen Ridge Area). The sediments lying
above “A” are Miocene or younger in age, and are believed to have been
deposited after the initiation of the second stage of opening. The sediments
below “A” are Oligocene or older; they are believed to have been deposited
when Jan Mayen Ridge was still attached to Greenland and formed part of its
eastern margin. The sediments have a larger terrigenous component than the
post-“A” sediments, but none of the sediments reached in these holes
indicated the presence of hydrocarbons. Horizon “O” and the rocks below it
lie far below the depth reached by the drill.
Hole 350 was drilled to the seismically opaque layer which was
determined to be basalt of Eocene (?) ∗ age. It is uncertain what lies below the
basalt layer – Jan Mayen Ridge type continental crust or oceanic crust.
Holes 348 and 337 in areas of lineated magnetic anomalies respectively
west and east of the Jan Mayen Ridge reached basalt of appropriate age and
confirmed the oceanic nature of these areas.
Thus, our deductions about the hydrocarbon potential are based on
fragmentary data. At the present state of knowledge they allow us to deduce
areas that almost certainly can be excluded as prospective areas for
hydrocarbon exploration. Whether the remaining areas which could contain
hydrocarbons actually do so can be determined only after much more detailed
__________
∗
Secretariat note: [sic]
18 ICELAND/NORWAY

geophysical work and intensive exploratory drilling carried down to great

depths.
The area of demonstrably oceanic crust colored red in Figure 2 can
almost certainly be excluded as a prospective region for hydrocarbon
exploration mainly for the following reasons: insufficient thickness of
sediments overlying oceanic crust, poor likelihood of high content of organic
material within these sediments, unfavorable structural and trapping
conditions. Similar remarks apply to the oceanic area west of the Jan Mayen
Ridge. For these reasons the oceanic areas can almost certainly be excluded
from considerations of prospecting for hydrocarbons. This also applies to the
area adjacent to the north of Jan Mayen.
The areas which have been shaded blue and purple on the map are also
considered very unlikely prospects for petroleum exploration, although less so
than the oceanic areas shaded in red. Sediments above the basalt generally are
quite thin, and their petroleum potential is considered very low for the same
reasons described above for the oceanic areas. An area containing a very thick
(greater than 2.5 km) section of post-“O” and post-basalt sediments on the
eastern flank of the Jan Mayen Ridge is indicated in Figure 2. This area
extends on either side of the boundary between the yellow and the purple
areas. Because of the large thickness this section could by itself provide the
source and reservoirs for hydrocarbon accumulation. This part of the purple
area is an exception to the general statement of low prospectivity.
The presence of sediment below the basalt cannot be excluded in this area as it
is in the oceanic areas, but the lack of direct evidence of such presents a
problem in the evaluation of the petroleum potential. If substantial thicknesses
of sediment lie below the basalt, they could constitute an important
hydrocarbon prospect.
The boundary between the blue/purple region and the yellow/orange
region is uncertain and discussion of the yellow/orange region may, in general,
apply to the sediments that may lie below the basalt as described above.
The yellow/orange area is characterized by two major rock units of
hydrocarbon potential separated by a prominent seismic reflector “O”. This
reflector may represent the top of a basalt layer, but it is generally considered
to be an unconformity or a surface that characterizes a gap in the
sedimentation process caused by the separation of Greenland from Norway 55
million years ago. The presence of sedimentary rocks below reflector “O” can
be documented by seismic surveys in only very limited areas. Rocks of
equivalent age on Greenland and Norway include source and reservoir rocks,
two fundamental elements required for petroleum generation and
accumulation. Petroleum has been discovered from rocks of equivalent age in
Norway demonstrating that the other requirements for petroleum generation,
maturation, migration, and accumulation have been met in that region, but
because of the unique subsequent geologic history of the ridge, it is not
possible at this time to make such a statement for the Jan Mayen Ridge Area.
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 19

Under the assumption that the older rocks of Jan Mayen Ridge are similar
to the favorable rocks of the Norwegian and Greenland sequences they
may contain accumulations of hydrocarbons or serve as source rocks.
The sediments lying above reflector “O” are sufficiently thick in some areas to
generate oil if source rocks are contained within them, independent of the
older rocks below reflector “O”.
The hydrocarbon potential of the northern part of the Jan Mayen Ridge,
situated north of the oblique depression (see Figure 1), is regarded as more
favorable mainly because it has a larger areal extent than the southern part.
It should be stated that the southern part is less understood and appears to be
more complex than the northern part.
A site survey carried out by Soviet scientists on the southern part of the
Jan Mayen Ridge Area for the location of scientific drill holes, carried out
sediment sampling operations. They reported the discovery of sediments with
traces of petroleum gases in an area near 9°W 67°N. Because of the
inconclusive nature of this data we have not attached much weight to the
reported discovery.
In the above discussion we have emphasized the relative potential for
hydrocarbons of different zones within the Jan Mayen Ridge Area. However,
considered in comparison with known oil-producing areas worldwide, the
overall potential cannot be considered good, based on the existing
fragmentary data. We emphasize that detailed further exploration could
change this assessment.

References

Belousov, V.V., Milanovskii, E.E. (eds.), 1979. Islandiya i sredinnokeani-

cheskii chrebet, Geomorfolgiya, Tecktonika M. Nauka.
Dittmer, F., Fine, S., Rasmusen, M., Bailey, J.C., and Campsie, J., 1975.
Dredged basalts from the Mid-Atlantic Ridge north of Iceland, Nature,
254:298-301.
Eldholm, O., and Windisch, C., 1974. Sediment distribution in the
Norwegian-Greenland Sea. Geol. Soc. Amer. Bull., 85:1661-1676.
Gairaud, H., Jacquart, G., Aubertin, F., and Beuzart, P., 1978. The Jan Mayen
Ridge synthesis of geological knowledge and new data. Oceanol. Acta,
1:335-358.
Garde, S.S., 1978. Zur geologischen Entwicklung des Jan Mayen Ruckens
nach geophysikalischen Daten. Doctor Thesis, Fak Natur Geistewissench.
Tech. Univ. Clausthal, 74 pp.
20 ICELAND/NORWAY

Grønlie, G., and Talwani, M., 1978. Geophysical Atlas of the Norwegian
Greenland Sea. VEMA Research Series IV, Lamont-Doherty Geological
Observatory, Palisades, NY.
Grønlie, G., Chapman, M., and Talwani, M., 1979. Jan Mayen Ridge and
Iceland Plateau: Origin and evolution. Norsk Polarinst Skrifter, 170:25-47.
Henderson, G., 1976. Petroleum Geology. in Geology of Greenland, Escher,
A., and Watt, W.S. (eds.), 488-505.
Hinz, K., 1972. Der Krustenaufbar des Norwegischen Kontinental-randes
(Vøring Plateau) und der Norwegischen Tiefsee zwischen 66° und 68° N
nach seismischen Untersuchungen. Meteor, Forschungs-Ergebnisse, Reihe,
C, 10:7-16.
Hinz, K., 1975. Results of geophysical surveys in the area of the Aegir Ridge,
the Iceland Plateau, and the Kolbeinsey Ridge. Norges geol. unders.
316:201-203.
Hinz, K., and Schlüter, H.-U., 1978 Der Nordatlantik-Ergebnisse
geophysikalischer Untersuchungen der Bundesanstalt für Geowissens-
chaften und Rohstoffe an Nordatlantischen Kontinentalranden. Erdeol-
Erdagas-Zeitschrift, 94:217-280.
Hinz, K., and Schlüter, H.-U., 1980. Continental margin off East Greenland.
Proceedings of the Tenth World Petroleum Congress, Bucharest, Vol. 2,
Exploration Supply and Demand, Heyden and Son Ltd., London, 405-418.
Johnson, G.L., and Heezen, B.C., 1967. Morphology and evolution in the
Norwegian-Greenland Sea. Deep-Sea Res., 14:755-771.
Sundvor, E., Gidskehaug, A., Myhre, A., Eldholm, O., 1979. Marine
geophysical survey on the northern Jan Mayen Ridge. The Norwegian
Petroleum Directorate’s geol./geophys. investigation sci. Rep. No. 6,
Jordsjelvstasjonen: Bergen, Norway.
Talwani, M., and Udinstev, G., et al., 1976. Survey at Sites 346, 347, 348, 349,
and 350. The area of the Jan Mayen Ridge and the Iceland Plateau. Initial
Reports of the Deep Sea Drilling Project, Vol. 38, U.S. Government
Printing Office, Washington, DC, 1256 pp.
Talwani, M., and Udinstev, U., 1976. Tectonic synthesis, in Talwani, M.,
Udinstev, G., et al. (eds.), Initial Reports of the Deep Sea Drilling Project,
Vol. 38, U.S. Government Printing Office, Washington, DC, 1256 pp.
Talwani, M., and Eldholm, O., 1977. Evolution of the Norwegian-Greenland
Sea. Geol. Soc. Amer. Bull., 88:969-999.
Udinstev, G.B., and Kosminskaya, I.P., in press. Heezen’s ideas about the
tectonic heterogeneity of the ocean floor and their application to the new
data obtained in the North Atlantic Ocean. Heezen Memorial Volume.
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 21

Sources of Data

LAMONT-DOHERTY GEOLOGICAL SURVEY (LDGO on Figure 2):

Approximately 2000 km MCS lines from 1978 cruise RC21-14. Single-
channel seismics, gravity, and magnetics from several research cruises of the
R/V VEMA collected over a period of more than ten years. Sonobuoy
reflection/refraction data from both MCS and single-channel seismic
investigations. Two-ship MCS Expanded Spread and Constant Offset Profiles
collected in collaboration with Universities of Bergen and Oslo, Norway,
in 1978.
BGR, FEDERAL REPUBLIC OF GERMANY (BGR - 75 & 76 on Figure 2):
1969: Refraction seismic station line III, PLANET cruise 1969
1972: METEOR cruise no. 28, single-channel reflection seismic profilling
1975: 48 multichannel reflection seismics, 635 km, BGR-North Atlantic
cruise 1975
1976: 48 multichannel reflection seismics, 694 km, BGR-North Atlantic
cruise 1976
CNEXO/IFP, France (CNEXO - 75 on Figure 2):
1975: CEPAN 1 survey, 24 multichannel reflection seismics, 2500 km
UNIVERSITY OF BERGEN, NORWAY (Norway (University of Bergen) on
Figure 2):
1978: MCS 400 km 20-channel; sonobuoy refraction
NORWEGIAN PETROLEUM DIRECTORATE (Oljedirektorate - 79 on
Figure 2):
1979: 950 km, multichannel seismic reflection profiling, sonobuoy
stations

______________

As their report makes clear, the experts have carefully considered the
petroleum potential of the areas concerned. In their opinion this potential is
not encouraging. The areas shown in red on the map reproduced in Figure 2
“can almost certainly be excluded as a prospective region for hydrocarbon
exploration.” The areas which have been shaded blue and purple on the map
“are also considered very unlikely prospects for petroleum exploration
although less so than the oceanic areas shaded in red.”
22 ICELAND/NORWAY

This leaves – in the experts’ opinion – the Jan Mayen ridge as the area
where oil potential may exist. These areas are shaded yellow and orange on
the Figure 2 map. In addition, the experts described an area on the Eastern
flank of the Jan Mayen Ridge which “extends on either side of the boundary
between the yellow and the purple areas. Because of the large thickness this
section could by itself provide the source and reservoir for hydrocarbon
accumulation.” This area is shaded dark purple on the map.
The experts further conclude that “the hydrocarbon potential of the
Northern part of the Jan Mayen Ridge, situated north of the oblique
depression, is regarded as more favorable mainly because it has a larger extent
than the Southern part. It should be stated that the Southern part is less
understood and appears to be more complex than the Northern part.”
However, the conclusions of the experts are the following:
“In the above discussion we have emphasized the relative potential for
hydrocarbons of different zones within the Jan Mayen Ridge Area. However,
considered in comparison with known oil-producing areas world-wide, the overall
potential cannot be considered good, based on the existing fragmentary data.
We emphasize that detailed further exploration could change this assessment.”

Section VI

POSSIBLE METHODS AND APPROACHES

As stated by the geological experts in their report:

“The concept of natural prolongation can be considered in two different senses,
morphological and geological. Morphologically the Northern part of the
Jan Mayen Ridge can be considered a southward extension from the shelf of
Jan Mayen. On the other hand, Jan Mayen Ridge cannot morphologically be
considered an extension from the Icelandic shelf.”
Geologically, the experts consider that the Jan Mayen Ridge is neither a
prolongation of Jan Mayen nor of Iceland. They express this opinion as
follows:
“However, geologically Jan Mayen Ridge is a microcontinent that predates both
Jan Mayen and Iceland which are composed of younger volcanics; therefore the
ridge is not considered a natural geological prolongation of either Jan Mayen or
Iceland.”
In the light of these findings, the Conciliation Commission is of the
opinion that the concept of natural prolongation would not form a suitable
basis for the solution of the outstanding issues.
In this context the Commission reverts to the wording of its mandate:
“In preparing recommendations with regard to the dividing line for the shelf
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 23

area between Iceland and Jan Mayen, the Commission shall take into account
Iceland’s strong economic interests in these sea areas, the existing
geographical and geological factors and other special circumstances.” In order
to submit recommendations to the two governments, such recommendations
must be unanimously agreed upon by the Conciliation Commission. It follows
from the mandate that the Conciliation Commission shall not act as a court of
law. Its function is to make recommendations to the two governments which
in the unanimous opinion of the Commission will lead to acceptable and
equitable solutions of the problems involved.
Although not a court of law, the Commission has thoroughly examined
state practice and court decisions in order to ascertain possible guidelines for
the practicable and equitable solution of the questions concerned.
Although, the Commission deems it inappropriate to deal at any length
with such state practice and court decisions, account should, however, be
taken inter alia of the provisions on delimitation of continental shelves
contained in Article 83 of the Draft Convention on the Law of the Sea.
(see page 9 above.) ∗ It seems that these draft texts have at least to some extent
been influenced by the decisions rendered on February 20, 1969 by the
International Court of Justice in the North Sea Continental Shelf Cases.
State practice has many examples of dividing lines which vary in
accordance with the circumstances of the case.
One approach is to consider whether the natural prolongation concept is
applicable. In the light of the geological report, the Commission felt, as noted
above, that the natural prolongation concept would not be helpful in finding
an acceptable solution to the problems.
Other approaches seek to determine a certain proportionality by dividing
the area concerned between the parties on the basis of distance and other
relevant factors. As mentioned in Section IV, Jan Mayen, as an island, is in
principle entitled to its own territorial sea, contiguous zone, exclusive
economic zone and continental shelf (Article 121 of the Draft Convention).
On the other hand, where boundary questions arise with neighboring states,
the principles pertaining to delimitation are applicable to Jan Mayen
(Articles 15, 74, and 83 of the Draft Convention).
In state practice a wide variety of solutions have been used in regard to
drawing boundary lines. Frequently the median line has been chosen as
providing an equitable solution. In other cases account has been taken of
special circumstances leading to a great diversity of solutions in order to
accommodate the relevant factors of each case.
Islands belonging to a state and lying in the vicinity of its coasts are
ordinarily, given full weight for delimitation purposes. Where both coastal
__________
∗
Secretariat note: Page 11 in the present volume.
24 ICELAND/NORWAY

states have islands along their coasts, examples are found where a “trade-off”
takes place by ignoring the islands on both sides when drawing the boundary
line. Where islands are situated within the 200-mile economic zone of another
state, the “enclave principle” has sometimes been utilized to give them
territorial seas. There are other examples in which islands have been given
limited weight, particularly in straits and other narrow areas.
Finally, there are examples of agreements for joint development and
cooperation in overlapping areas of continental shelves between neighboring
countries.
In its judgment of February 20, 1969 in the North Sea Continental Shelf
Case, the International Court of Justice emphasized the wide variety of
situations as follows:
“93. In fact there is no legal limit to the considerations which States may take
account of for the purpose of making sure that they apply equitable procedures,
and more often than not it is the balancing-up of all such considerations that will
produce this result rather than one to the exclusion of all others. The problem of
the relative weight to be accorded to different considerations naturally varies with
the circumstances of the case.” (I.C.J. Reports 1969 p.51.)
Having in view the broad scope of the considerations that may
appropriately be recognized in formulating its recommendations, the
Commission concluded that an approach should be used which takes into
account both the fact that agreement by Iceland and Norway on Iceland’s 200-
mile economic zone has already given Iceland a considerable area beyond the
median line and the fact that the uncertainties with respect to the resource
potential of the area create a need for further research and exploration. Rather,
therefore, than propose a demarcation line for the continental shelf different
from the economic zone line, the Commission recommends adoption of a joint
development agreement covering substantially all of the area offering any
significant prospect of hydrocarbon production. The Commission’s reasons
for this recommendation include the desire to further promote cooperation and
friendly relations between Iceland and Norway. Special consideration has also
been given, to the following factors:
(a) Iceland is totally dependent on imports of hydrocarbon products.
(b) The shelf surrounding Iceland is considered by scientists to have very
low hydrocarbon potential.
(c) The Jan Mayen Ridge between Jan Mayen and the 200-mile
economic zone of Iceland is the only area which is considered to have the
possibility of finding hydrocarbons. The experts consider, however, the
whole area to be a high geological risk.
(d) The water depths overlying the Jan Mayen Ridge are too great
to permit exploration using present technology. The distances from
the natural markets for hydrocarbons – especially gas – are great.
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 25

Consequently, very large hydrocarbon discoveries would seem necessary

in order to make such finds commercial.
The recommended joint development agreement should be based on the
following main principles:
First, given the opinion of the geological experts that the area of interest
for potential hydrocarbon deposits is the Jan Mayen Ridge extending
southward from Jan Mayen towards Iceland, the Commmission proposes that
the area subject to joint development be defined by the following coordinates:
7035° N. Lat.
°
68 N. Lat.
30°
10 Long.
30°
6 Long. 4
This area comprises some 45,475 km2. It includes the major part of the
Jan Mayen Ridge and refers to the areas which the scientists who met at
Lamont-Doherty Observatory on December 8-10, 1980 consider to have some
hydrocarbon potential. The area south of the 200-mile economic zone of
Iceland comprises some 12,725 km2. The area lying north of the 200-mile
zone of Iceland comprises some 32,750 km2.
The activities in the area may be divided into three stages:
(a) Pre-drilling stage,
(b) Drilling stage,
(c) Development stage.
These will be described in turn.

PRE-DRILLING STAGE

This marks the early stage of systematic geological mapping. The prime
tools of this stage are seismic surveys, although magnetic surveys may also be
used.
The pre-drilling stage is normally preceded by earlier “academic”
investigations which define the more basic geological elements. The results of
these “academic” activities are often published in scientific publications. The
area under consideration here has been the subject of considerable academic
interest. The report of the geological experts is based on such investigations.
The more systematic petroleum-oriented mapping of the area has not,
however, been started.
__________
4
See Figure 3 […] [in the front pocket of this volume]
26 ICELAND/NORWAY

The pre-drilling stage may in practice be subdivided into two phases, the
first of which aims at defining the main geological elements, while the second
aims at defining the geological elements in further detail and at establishing
drilling locations.
Both phases are based mainly on the seismic profiles obtained from the
seismic surveys. The main difference between the two phases is that during
the first phase the grid distance between the seismic profiles averages 4-6 km
or more. In the second phase the seismic survey is considerably more detailed,
and the grid distance is about 1 km or, in some cases, even less.
On the Norwegian Continental Shelf the Norwegian Petroleum
Directorate (PD) carries out the first phase with funds appropriated from the
State Budget on a yearly basis. On the basis of these surveys, areas of the
Norwegian Continental Shelf may be opened for further surveys by petroleum
companies on the basis of “exploration” licenses. The relevant data thus
obtained are available to interested companies at a reasonable price. The
companies then undertake their own detailed surveys. Each company does its
own interpretation and has the capacity to acquire detailed seismic data in a
manner reflecting its own school of geological thought. The companies often
differ substantially as to the prospectivity of different structures. This is
particularly true in the case of “new” areas like the Jan Mayen Ridge.
The Commission believes that it would be important to assess the
possible hydrocarbon potential of the area concerned at an early date. The
Commission accordingly suggests that the first-phase seismic surveys should
be undertaken as a joint venture between the Norwegian Petroleum
Directorate and an equivalent or similar government organization of Iceland.
These surveys should to a reasonable extent cover the specified area both
north and south of the 200-mile boundary of Iceland’s economic zone as it is
desirable that a scientific hydrocarbon-oriented assessment of the area be
based on an adequate knowledge of the Ridge as a whole.
In preparing such a survey, the two governments should cooperate and
coordinate their efforts to draw up a general plan for the seismic exploration
work. It is, however, apparent that the costs of such seismic surveys would be
high – certainly on the order of millions of dollars – and that the conclusions
to be anticipated therefrom are conjectural. The execution of such surveys also
requires considerable expertise and experience. For these and other reasons
the Commission proposes that the recommended seismic surveys should be
undertaken by the Norwegian Petroleum Directorate in accordance with plans
elaborated by the two governments jointly. The costs of such surveys should
be borne by Norway unless otherwise agreed by the parties.
Icelandic and Norwegian scientists and experts should have the
opportunity to participate in the seismic surveys on an equal footing. If the
survey data are promising, the seismic surveys could be made available for
sale to oil companies at adequate prices. In that case the cost of the surveys
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 27

could be recovered from the proceeds of such sales. The Commission

proposes that any net profit after the recovery of costs should be shared
between the two countries on a basis to be negotiated by them.
The second phase of the pre-drilling stage would entail the opening up of
areas for general exploration permits to petroleum companies, if the
conclusions to be drawn from the first seismic phase were sufficiently positive.
The time required for the pre-drilling stage is likely to be 5-9 years in all:
3-5 years for the first phase and 2-4 years for the second phase.

DRILLING STAGE

If the conclusions drawn from the pre-drilling stages so warrant, the next
stage will be the drilling stage. This stage begins after negotiations – often
protracted and difficult – between the companies and the government
concerned. After the successful conclusion of such negotiations, exploitation
licenses will be issued by the authorities concerned giving the licensee the
rights in a specified area to carry out further exploration and to drill for
hydrocarbons.
Under Norwegian petroleum legislation the drilling stage can also be
subdivided into two phases. The first is a 6-year period in which the licensee
must comply with a strict work program imposing an obligation to drill a
certain number of wells. If within the stipulated 6-year period the licensee has
fulfilled his work obligations and other obligations such as the observance of
safety and environmental regulations, the exploitation license will be extended
for a period of 30 years. However, after the expiry of the 6-year period half of
the license area must be relinquished, and during the remaining period the
area-fees increase substantially and progressively with time.

DEVELOPMENT STAGE

The initiation of this stage will depend on positive drilling results. The
development stage will ordinarily be the most expensive, but also the most
rewarding because it is based on an assessment that the hydrocarbon finds are
commercial; the investments in this stage are consequently the least risky.
As is apparent from the foregoing discussion, the investments and
economic risks differ substantially between the three stages. This has to be
taken into consideration when agreements concerning joint cooperation are
being worked out.
28 ICELAND/NORWAY

Forms of Joint Cooperation Agreements:

Funding and Risk Capital
There are several possible types of joint cooperation agreements, giving
various alternatives with regard to performance and control, ownership of the
hydrocarbons found, and approaches to funding and risk capital. At least the
following four main categories of joint cooperation agreements are commonly
used today.
(a) Concession contracts with joint-venture arrangements
The contents of such contracts vary widely. Recent versions provide for a
specified percentage of state-participation, ordinarily between 50-75 percent.
Such recent state-participation arrangements ordinarily contain provisions for
“carried interest.” Under a “carried interest” contract the expenses for the
government’s share of exploration and drilling activities is borne by the
private company or companies concerned up to the time when a commercial
find has been made. If the results are negative, the companies absorb the
entire cost, including the state’s percentage in the joint venture. The usual
carried-interest contract also provides that if a commercial find is made the
companies will be reimbursed over a period of time for the state’s share of the
costs of exploration and drilling from the proceeds of production.
In the Commission’s opinion, a joint-venture arrangement of this type
with participation by Norway, Iceland and chosen oil companies may offer a
viable solution to hydrocarbon activities in the area concerned.
(b-d) Service contracts, Production-sharing contracts and entrepreneur
contracts are other examples of joint-cooperation arrangements between a
state and private oil companies. Service contracts and production sharing
contracts have many common features. The main such feature is that the state
concerned formally retains its ownership of the area as well as of any
hydrocarbon finds made. The private oil company (companies) carries all
financial risk at least up to the time when a commercial find has been made.
The company thereafter has the right to buy a certain percentage of the oil or
gas produced at agreed prices (service contracts) or to obtain a certain
percentage of the oil or gas produced in kind over a period of years
(production-sharing contracts). Whether and to what extent the company will
be reimbursed for its expenses after a commercial find has been made varies
from contract to contract. These two types of contracts may also be
categorized as “risk contracts.”
Entrepreneur contracts in the strict sense of the term imply that a
contractor undertakes to perform certain tasks in relation to petroleum
activities and is paid for his services according to the terms of the contract.
This type of contract is not a risk contract in the ordinary sense.
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 29

As previously stated, the Commission regards joint-venture agreements as

the most viable solution to the cooperation between the two parties foreseen in
the specified area.
Various methods of obtaining the funding and risk capital necessary for
such joint ventures could be used.
Under one method the two countries could at the drilling stage
appropriate the necessary capital in their state budgets or otherwise in
proportion to each country’s share of the joint venture. A state company
(or state companies) would then carry out all drilling-stage activities.
The Commission cannot, however, recommend this type of financing.
Hydrocarbon exploration and exploitation are in general financially high risk
activities, especially in unknown areas. In the specified area the geological
risks, the great water depths and other environmental circumstances combine
to make the financial risks very large. Consequently, and particularly at the
outset, it seems advisable for economic as well as for technological reasons to
bring into the joint venture (ventures) oil companies with deep-water
experience.
Thus the Commission recommends that in a first period during which the
area concerned is unknown as far as hydrocarbon potential and geological and
technological features and obstacles are concerned, the necessary risk capital
should – to the extent possible – be invested by oil companies as participants
in the joint venture. The oil companies must be willing – again to the extent
possible – to carry both the Norwegian and the Icelandic shares of the costs
through the drilling stage until a commercial find has been made. This
principle has been applied to the Continental Shelf of mainland Norway.
Important experience and valuable results have been obtained from this
approach. However, the difficulties with such an approach in the present case
should not be minimized. The combined Norwegian-Icelandic state
participation should be at least 50 percent. The areas are unknown and the
available information of the geology thereof not very encouraging.
Consequently, the Conciliation Commission could not form any opinion as to
whether it would be possible to obtain the necessary risk capital from private
sources.
Negotiations for the establishment of effective joint-venture groups are
necessarily complicated. Various considerations affect the possibility of
forming a group possessing the optimal combination of assets for the task.
Among such considerations are: experience in deep-water technologies;
experience with high-pressure formations; capital and rig availability;
geological expertise; differences of view on work programs, etc. In most cases
it is a combination of a number of factors which produces the optimal results.
30 ICELAND/NORWAY

The areas north and south of the northern demarcation

line of the Icelandic 200-mile economic zone

The part of the specified area south of the Icelandic 200-mile economic
would as mentioned above consist of an area of about 12,725 km2. The part
north of the 200-mile line would measure about 32,750 km2.
(a) The area north of the Icelandic 200-mile economic zone
Recognizing Iceland’s need for hydrocarbons, the Commission proposes
that Iceland should obtain an interest in all licensee groups north of its 200-
mile line. In the case of the Norwegian continental shelf, where exploration
and exploitation activities have already taken place, it is the practice to form
joint-venture groups for each license area. In the case of the specified area,
Iceland would be entitled to join each joint venture with an option to acquire a
fixed percentage of 25% (or less if Iceland so wishes). Iceland would have the
opportunity to participate in all joint-venture negotiations with the private
companies. If the Norwegian licensing system is changed to permit other
contract forms such as “service contracts” or “production sharing” contracts,
Iceland would have the right to participate in such arrangements with the same
percentage.
Norwegian legislation, oil policy and control, safety and environmental
regulations, and administration would apply to the activities in question.
In negotiations with oil companies for “carried interest,” it must be assumed
that both Norwegian and Icelandic state participation will so far as possible be
carried up to the moment a commercial find has been declared. The extent to
which the oil companies should be reimbursed for the governments’ share of
costs incurred by the companies up to the time a commercial find has been
made, would depend on the terms of the joint-venture contract. Frequently the
governments’ share of such costs is reimbursed through payments in kind
from the production over a period of years. In more recent cases Norway has
been able to obtain a few contracts where such expenses are not reimbursed.
Certain difficulties will arise if it proves impossible to obtain joint-
venture contracts under which the petroleum companies undertake to carry the
costs of the two governments as envisaged above. In that case two
possibilities may be foreseen: (a) the companies may be willing to carry a part
of the expenses of the two states; (b) the companies may not be willing to
undertake any amount of carried interest.
In these circumstances the two governments must decide whether they are
willing to undertake the venture, either on their own or in conjunction with oil
companies. In the event that the Norwegian Government decides to go
forward with the project either on its own or in a joint venture, but Iceland
decides that it will not participate due to the added risk, the question arises as
to what should be the status of Iceland.
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 31

If the results are negative and no commercial finds are made, Norway has
taken a risk and must carry the loss. In case a commercial find is made, the
situation is less obvious. The Commission recommends, however, that in such
a case Iceland should be allowed to acquire its share of participation in the
development phase, provided that within a reasonable time it reimburses
Norway for its share of the exploration and drilling costs incurred before that
phase.
When a find has been declared commercial, a new phase – the
development phase – will be entered. Although the cost in the drilling stage is
substantial (some 100-150 million N.kr. per well), it is in the development
phase that the really large investments are required. These may amount to
billions of N.kr. The state participation is not carried in this phase. Statoil –
the Norwegian state-owned petroleum company – pays its share of such
investments in proportion to Norway’s participation in the license area
concerned. The same principle must apply in the northern part of the
Jan Mayen Ridge area. Statoil will then pay its share according to Norwegian
state participation, and Iceland, presumably through its own state company,
should likewise pay its share of the costs of development in the case of a
commercial find.
(b) The area south of the northern demarcation line
of the Icelandic 200-mile economic zone
In this part of the specified area Icelandic oil legislation, oil policy and
control, safety and environmental regulations and administration would apply.
Norway should be allowed to participate in negotiations with oil companies
and have an option to acquire a 25 percent interest in joint-venture
arrangements. However, it should not be expected that Iceland should
accommodate Norway with a carried interest arrangement in the same manner
as has been proposed that Norway should do in regard to Iceland in the
Norwegian part of the specified area.
The Conciliation Commission has considered the problems which may
arise if a petroleum deposit extends on both sides of the demarcation line of
the specified area or extends both north and south of the Icelandic 200-mile
economic zone line.
The Conciliation Commission recommends the following solutions of
these problems:
If a hydrocarbon deposit is situated both north and south of the Icelandic
200-mile economic zone line, the usual unitization, exploitation, and
distribution procedures for the petroleum deposits should be agreed upon.
If a hydrocarbon deposit is situated on both sides of the demarcation line
of the specified area south of the Icelandic 200-mile economic zone line, the
same utilization approach would be applicable (i.e., the deposit should be
divided in accordance with a fair expert assessment and unitized exploitation
procedures).
32 ICELAND/NORWAY

If a hydrocarbon deposit is situated on both sides of the demarcation line

of the specified area north of the Icelandic 200-mile zone line, the whole
deposit should be considered as lying inside the specific area where the rights
and obligations of the two states are concerned.

OTHER FIELDS OF COOPERATION

The Conciliation Commission has considered – in the course of its

deliberations – whether other possible fields of cooperation should be
contemplated in connection with the proposed cooperation arrangements.
Such additional fields of cooperation could be directly or indirectly related to
hydrocarbon activities or pertain to other possible spheres of activity not
involving hydrocarbons. Examples of such cooperation would be access to
and transfer of technology and data in the hydrocarbon sector, conclusion of
long-term agreements which might secure petroleum supplies to Iceland at
reasonable prices, and access to scientific and practical training in the
petroleum sector. The Commission felt, however, that such proposals may lie
outside its mandate.

Section VII

SUMMARY OF RECOMMENDATIONS

1. For the purpose of these recommendations the Commission proposes

a specified area defined by the following coordinates:
7035° N. Lat.
68° N. Lat.
30
10 ° W. Long.
30
6 ° W. Long. 5
2. Taking the demarcation line between the 200-mile economic zone
and the Norwegian fisheries zone as a dividing line, the specified area has two
parts: the part north of the demarcation line comprises some 32,750 km2. The
area south of this line comprises some 12,725 km2.
3. The Commission proposes a joint cooperation arrangement for the
area so defined.
4. In the pre-drilling stage, which includes a systematic geological
mapping of the specified area mainly by seismic surveys, the Commission
__________
5
See Figure 3 […] [in the front pocket of this volume]
 SHELF AREA BETWEEN ICELAND AND JAN MAYEN 33

recommends that such surveys should be undertaken jointly by the Norwegian

Petroleum Directorate and the equivalent government organization of Iceland.
These seismic surveys should be carried out by the Norwegian Petroleum
Directorate according to plans elaborated by the two governments jointly. The
costs of such surveys should be borne by Norway unless otherwise agreed by
the parties. Icelandic and Norwegian experts should have the opportunity to
participate in the seismic surveys on an equal footing. The results and
evaluations of the surveys should be equally available to both parties.
If any profits accrue from the sale of the seismic surveys to interested
companies or organizations, such profits should be shared by the two
countries on a basis to be negotiated.
5. If the surveys justify further exploration, drilling and possible
exploitation activities, the Commission proposes that concession contracts
with joint-venture arrangements between the two parties and oil companies be
negotiated.
6. In the part of the specified area north of the Icelandic 200-mile
economic zone Iceland should have the opportunity to acquire a 25 percent
interest in any joint-venture arrangement. In negotiations with oil companies
an effort should be made to assure that the costs of both Norwegian and
Icelandic state participation are “carried” by the oil companies up to the
moment when a commercial find has been declared.
Should the oil companies refuse to “carry” the state Participation wholly
or in part, the Conciliation Commission refers to its proposals made for such
event in the foregoing Section VI.
Norwegian legislation, oil policy and control, safety and environmental
regulations and administration would apply to the activities in this part of the
specified area.
7. In the part of the specified area south of the northern demarcation
line of the Icelandic 200-mile economic zone, Norway should have an option
to acquire a 25 percent interest in any joint-venture arrangement. However, it
should not be expected that Iceland will accommodate Norway with a carried-
interest arrangement in the same manner and to the same extent proposed for
the Norwegian part of the specified area. However, Norway should be allowed
to participate in the negotiations with the oil companies.
Icelandic legislation, oil policy control, safety and environmental
regulations and administration would apply to the activities in this part of the
specified area.
8. In the development phase in any part of the specified area it is
understood that each of the two states parties would carry a share of the
development costs proportional to its share of state participation.
34 ICELAND/NORWAY

9. The Commission at the end of Section VI has made certain

recommendations for dealing with deposits on both sides of the 200-mile
demarcation line or overlapping some part of the specified-area boundary and
refers to its proposals in this respect and considers them included among the
present recommendations.

(Signed) Elliot L. Richardson

Chairman

(Signed) Hans G. Andersen,

Conciliator for Iceland

(Signed) Jens Evensen

Conciliator for Norway