One region is making a surprise comeback after years of declining activity – the Norwegian Arctic, even as the oil industry continues to cut jobs, projects and costs amid low crude prices, company executives and officials say.

The number of exploration wells in the Norwegian part of the Barents Sea is increasing to 10 in 2016 from seven last year while the search for oil and gas in mature offshore areas in the North Sea is being axed this year.

In an oil licensing round set to open unexplored acreage in the Barents Sea, near Norway’s offshore border with Russia, the government will hand out new drilling permits by the end of the second quarter, in addition to the increase in the number of exploration wells in the Norwegian part of the Barents Sea.

In the next few years, with a focus on the Arctic, it was seeking a rebound in exploration activity offshore Norway, Oil major Statoil said.

“We’re looking to the 23rd round to trigger an uptick in activity for us,” Statoil’s head of exploration for Britain and Norway, Jez Averty, told Reuters.  Averty  was talking to the press on the sidelines of an industry conference. Averty was referring to the government’s ongoing process.

“There have been both downturns and upturns in the Barents Sea, but now we are definitely on an upturn,” the head of Norway’s Petroleum Directorate, Bente Nyland said.

Goliat, the first oil-producing field in the region, has finally attracted the attention of Italy’s Eni which has finally begun production after years of delay.

It would be able to cut development costs further at its Johan Castberg oilfield, a key project, Statoil said this week.

“I am very optimistic for the Barents Sea … When Statoil announced their work on Castberg and said they have reduced the cost of the development to such low levels, it was a huge signal to the rest of the industry,” the deputy leader of trade union Industri Energi, Frode Alvheim, told Reuters.

Progress in the development of two significant oil discoveries, the Alta/Gotha and Wisting were reported recently by Swedish oil firm Lundin Petroleum and Austria’s OMV.

However there are significant challenges also. oil firms are more reliant on collaboration to develop projects in tandem due to the constraints of higher costs and a lack of infrastructure to transport oil and gas from the fields which are a big hurdle.

The geological uncertainty is higher and knowledge of the acreage lower than in mature areas even though the Petroleum Directorate believes half of Norway’s undiscovered resources lie beneath the Barents seabed.

While other majors such as ExxonMobil, Eni and Total did not apply primarily as they are searching for larger discoveries in other parts of the world, Shell too withdrew its application from the 23rd licensing round earlier this month.

(Adapted from Reuters)