On 21st June 2009, Greenland took a step closer to independence and, in turn, control of its vast natural resources following 300 years of Danish rule over the territory.

This move towards self governance follows a referendum held in November 2008, which resulted in more than 75% of the voting population of Greenland being in favour of taking more control of several vital areas, including its potentially lucrative natural resources: oil, gas, gold and diamond reserves. Greenland will also have control over its justice and police affairs and more control of its foreign affairs. It will however, remain a part of the Kingdom of Denmark for the time being. These changes took effect on Greenland's national day with the Danish Queen attending a ceremony in Greenland's capital Nuuk to observe its new status.

In recent years, there has been a new race for resources in the Arctic region as geologists seek access to the vast area. US research scientists believe that Greenland's northern tip is especially rich in oil and gas, and that the country as a whole may be sitting on 50 billion barrels of oil. This, coupled with growing national feeling amongst its 56,000 inhabitants, is said to be creating pressure for full independence from Denmark.

Mineral resources in Greenland are currently subject to the Mineral Resources Act 1991 (as amended), which is governed by Danish Law. The Mineral Resources System, which is a part of the Greenland Home Rule System, establishes the framework for joint Greenlandic-Danish Administration of mineral resources in Greenland and is based upon equal representation between the governments of Greenland and Denmark. The Bureau of Minerals and Petroleum (BMP) under the Government of Greenland is responsible for the management of mineral resource activities in Greenland, which includes the day-to-day administration of licences.

Following the changes on 21st June 2009, it is understood that a proposal for a new Greenlandic Mineral Resources Act is to be presented to the Greenlandic parliament for consideration in Autumn 2009. This new Act is to be presented with a view to Greenland taking legislative as well as administrative control of its mineral resourses.

Furthermore, the European Commission has called for EU countries to coordinate their Arctic policies in order that development of the region's huge resources can be sustainable and environmentally responsible.

It will be interesting to see how Greenland's energy industry continues to evolve in light of both these recent and proposed changes to its administration.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 23/07/2009.