Greenland's new government said this week it doesn't plan to issue any new licences for offshore oil exploration, an announcement that was welcomed by environmentalists who oppose drilling in Arctic waters.

Jens-Erik Kirkegaard, Greenland's new minister for natural resources, said the 20 licences issued to date were at a level that are "natural for an area like Greenland" and that the government would be "reluctant" to offer more.


The Ocean Rig Corcovado, one of two drilling vessels Cairn Energy PLC used to explore for oil and gas off Greenland's western coast in 2011. ((Cairn Energy PLC))

Existing licences would not be affected, he added.

The U.S. Geological Survey estimates that 13 per cent of the world's undiscovered oil and 30 per cent of its untapped natural gas is in the Arctic.

Only one company, Scotland-based Cairn Energy, has drilled off Greenland in recent years. However, it found no commercial quantities of oil and gas.

Greenpeace, which staged a series of protest actions against Cairn's operations, welcomed the new government's policy as "a major step towards protecting Greenland from a catastrophic oil spill," but called for a total ban on oil drilling in the waters off the ice-capped island.

How to manage the race for natural resources off and on Greenland will be a key issue for the new coalition government that was formed after elections to the local Parliament earlier this month.

The three-party coalition is spearheaded by the centrist Siumut party, whose leader Aleqa Hammond is set to become Greenland's first female premier. The government will formally take office on April 5.

In a coalition agreement this week, the parties said they would review a law passed last year that allows large mining projects to import labour from abroad. Hammond and others have raised concerns that the law could lead to an influx of thousands of Chinese workers instead of providing jobs for Greenland's residents, most of whom are Inuit.

"As our country develops toward statehood, the need for Greenlandic labour is greater than ever," the parties said in the agreement. "The coalition emphasizes that foreign labour should be minimized."

Unlike the previous government, Hammond's coalition is in favour of lifting a ban on uranium mining, which could also pave the way for exploitation of rare earths, sought-after metals that are key ingredients in smartphones, weapons systems and other modern technologies.

A major rare earths deposit found on Greenland's southern tip can't be exploited under current laws because the ore also contains uranium.

Many Greenlanders are hoping that harvesting the country's mineral wealth will help them achieve full independence from former colonial master Denmark.

Copenhagen still decides on foreign, defence and security policy, and supports Greenland with an annual grant that accounts for about two-thirds of the island's economy.