Sinopec looks north for oil

However, experts said the exploration costs in Iceland will be extremely high, and the work will require advanced technology, which will pose major obstacles for the Chinese explorers.

Besides, it is very likely that they will face objections by environmental groups once work on projects begins.

Andy Brogan, global oil and gas leader with Ernst & Young, told China Daily on Monday that the Icelandic government will be sensitive about environmental protection in the area. But he added that the country is also very pragmatic about the economic benefits of energy exploration.

"It is still too early to predict how successful the deals can be," he said.

Heavily indebted Iceland is hungry for foreign investment. The country was severely hit by the financial crisis that erupted in 2008.

Its financial sector, with a balance sheet 10 times that of the country's economy, collapsed.

The Arctic, the area north of the Arctic Circle, is thought to contain 13 percent of the world's undiscovered oil and 30 percent of its undiscovered natural gas, according to a report by Ernst & Young released on Monday.

Figures from the United States Geological Survey show that oil reserves in the Arctic stand at about 90 billion barrels.

As China's oil consumption is increasingly depending on foreign supply, it is clear that top oil and gas players in the country are moving faster to find and exploit resources overseas.

Sinopec has moved overseas a little slower than the other two big oil companies, CNOOC and China National Petroleum Corp, the country's largest oil and gas producer, which took their first steps abroad in 1993.

Sinopec only began to participate in the global natural resources market in 2009 by acquiring Addax Petroleum.

"Chinese oil companies have tended to invest in overseas resources in stable regions rather than high-risk areas in recent years," said K.C. Yau, partner with Ernst & Young.