The Nordic Explorer set off last week for the seas off Cape Farewell on the southern tip of Greenland. For the next few weeks the 269ft research ship will zigzag across the water to collect data on the rock formations thousands of feet below the seabed. It is not alone. Up and down the coasts of this desolate, ice-covered country, seven other ships are carrying out similar work.

The ships are funded by oil companies hoping to determine whether the country, long dismissed as too icy and remote to be worthwhile exploring, is one of the world’s last virgin oil provinces.

The US Geological Survey reported last year that Greenland could be sitting on reserves of up to 50 billion barrels. To put that into perspective, the North Sea has produced a total of 38 billion barrels since large-scale production began in the 1960s.

With reserves dwindling elsewhere and an oil price that makes Arctic oil attractive for the first time, the world’s largest island is experiencing a renaissance of sorts. In the past two years seven companies, including Exxon Mobil, Chevron and Britain’s Cairn Energy, have bought exploration blocks off western and southern Greenland.

Hans Kristian Olsen, head of Greenland’s state-owned Nuna Oil, expects more firms to dive in when the government auctions new blocks off the west coast next year.

He said: “Three years ago we had two licences. Today we have 13 and that number will rise.” Last year companies seismically mapped more of the country’s seabed than ever before.

It is not the first time Greenland has caught the eye of the oil giants. In the 1970s a handful of companies drilled five offshore wells. All were dry and were deserted. Statoil drilled another in 2000 with the same result. By comparison, more than 10,000 wells have been drilled in the North Sea.

So what’s different this time? The oil price for one. Though at $69 a barrel it is only half the level it reached last year, it is high enough for production in the Arctic, which can cost up to $50 a barrel. And as economies recover, especially the power-hungry ones of China and India, the price will rise further.

Mike Watts, chief executive of Cairn, said: “Once the oil price went above $40 there was a shift. At those levels, working in these harsh environments becomes attractive.” Cairn has said its blocks there could hold “multi-billion barrel reserves”.

Oil companies are also running out of options. Many of the world’s most prolific basins, such as the North Sea, are in terminal decline. Access to new fields is more tightly controlled than ever by governments.

Greenland, on the other hand, has opened its doors. The contracts it is offering split future revenues roughly down the middle between companies and the state. That compares with other countries such as Libya, which has offered licences that give companies just 2% of the proceeds.

The island’s openness is understandable: it needs all the help it can get. Nuna Oil, the state oil company, employs only seven people. Olsen admitted that the paucity of reliable data meant that “nobody knows if there is any commercial oil at all”.

The US Geological Survey estimates that the Arctic holds as much as 160 billion barrels — enough to meet the world’s needs for more than five years — or as little as 40 billion. The astonishingly wide range of projections is testament to the difficulty of working in the region, where large stretches of ocean are frozen for most of the year and ships must contend with icebergs the size of office buildings.

Daniel Rogstad, an oil analyst at Wood Mackenzie, the research firm, said almost nothing was insurmountable if the prize was deemed worthy. “You have people like Exxon and Chevron there,” he said. “They don’t go spending money unless they think it is worthwhile. The oil industry has a long track record of overcoming obstacles if the rewards are there.”

Watts admits that the projections for the size of oil fields are “nothing more than guesstimates ... based on disparate data”, which is why he has contracted the Nordic Explorer and half a dozen other ships to map the seabed.

He is not alone in his feeling that there are vast riches waiting to be uncovered. Paul Wheeler at Jefferies International, an investment bank, said Greenland “is one of a handful of frontier exploration plays left in the world that is available to international oil companies that could be game-changing if successful”.

For Greenland the stakes are high. Its annual GDP is just under £1 billion, half of which comes through subsidies from Denmark. Last autumn its 56,000 inhabitants, most of whom rely on fishing, voted for greater autonomy from the Danes. Just one big field would negate the need for financial aid and help secure their independence.

The world will be watching closely. The melting icecaps, due to what most argue is man-made pollution, means the riches locked beneath could finally become attainable.

That possibility has set off an Arctic landgrab, with Russia famously sending a submarine to plant a flag on the Arctic seafloor in 2007. Denmark’s shadow defence secretary said last month that it needs to establish “a more visible military presence and a larger combat aircraft presence” to protect its interests in Greenland’s natural resources. Canada, America and Norway are also staking claims to huge swathes of seafloor north of the Arctic circle.

For now tensions remain fairly low. That could change if the Nordic Explorer and the rest of the vessels trawling Greenland’s waters come up with the goods.

“Greenland is like the Arctic for beginners,” said Wheeler. “If they are successful it will heighten tensions all round the Arctic. Large finds would fundamentally change the fortunes of the companies and the countries that own the rights.”

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