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Sweden's Lundin stands by Arctic oil exploration plans

[STOCKHOLM] Swedish oil and gas company Lundin Petroleum confirmed Wednesday it will explore the Arctic further, bucking a general trend of withdrawal from the expensive and difficult region.

"We are very excited with the potential in the southern Barents Sea," chief executive Ashley Heppenstall said in a statement after the company struck oil in two prospects over the past two years.

The discoveries - made under prospects Gotha and Alta, some 100 miles off the Norwegian coast - lie in a remote region known for extreme weather that sends exploration costs soaring but the company said their proximity to each other would allow it to pool certain infrastructure.

Oil companies have looked to the Barents as reserves dwindle in the North Sea, but most competitors have pushed back their exploration plans following the steep drop in crude prices since June.

Crude oil, which stood at over US$100 a barrel in June, is now trading at between US$50 and US$60 per barrel.

A drilling project carried out last year by Norwegian state-owned giant Statoil in a northern part of the Barents failed to meet high industry expectations.

"In today's oil price environment there is little focus from the markets on exploration assets. Indeed many view them as a liability," Mr Heppenstall said.

"We however continue to believe in higher medium term oil prices and as such the key to create long term value will remain access to resources," he added.

On Monday Norway proposed eight new exploration licenses, one of which is located in the Barents Sea.