Edinburgh-based explorer Cairn Energy today hailed signs of a possible oil discovery in the untapped waters off the coast of Greenland.
Cairn - the only firm so far to have been granted permission to drill for oil offshore in Greenland - told investors there were "early indications of a working hydrocarbon system" in the Baffin Bay basin.
The group said it had discovered gas in thin sands in the area, which signals potential for oil.
The news is expected to spark a rush of interest in the Arctic waters from the oil industry - but campaigners were quick to raise concerns in the wake of BP's Gulf of Mexico oil spill disaster.
Greenpeace warned that Cairn's announcement was "grave news" and threatened the fragile Arctic environment.
Cairn said it was too early to gauge the potential of its find, with the well not yet drilled to its target depth.
It has been drilling in the area 110 miles (175km) off Disko Island in west Greenland since July, with plans to reach water depths of between 985ft (300m) and 1,640ft (500m) - more than twice the 500ft (152m) drilling moratorium initially imposed by US President Barack Obama after the Deepwater Horizon explosion.
Greenpeace, whose Esperanza ship is currently positioned within sight of Cairn's rigs in Greenland, claimed Cairn was risking another devastating oil spill by targeting "ever more dangerous, difficult-to-reach places".
It said tough conditions and icebergs posed a risk to operations in the region.
Campaigner Leila Deen added: "If a spill happened here, this pristine area would face an environmental catastrophe. The BP disaster in the Gulf of Mexico showed what can happen when they drill in deep and remote places."
The oil industry has only recently revisited the Arctic waters off Greenland for the first time since the 1970s, when explorations were unsuccessful.
But a Cairn spokesman said: "Cairn is operating offshore Greenland at the invitation of the Greenlandic government, which believes that oil and gas exploration offers the potential opportunity for Greenland's economic and social development.
"The Greenlandic government has established some of the most stringent regulations globally. These policies are modelled on those applied in Norway and recognised as being some of the strictest regulations in the world."
Cairn has around 200 people working on its operations in Greenland, with two wells currently being drilled.
Its T8 well - which made the gas discovery - is expected to reach its target depth of 1,640ft (500m) by the end of August.
Cairn stressed that its crew were managing icebergs "successfully", with an average of two or three icebergs a day coming within a 15.5-mile (25km) radius of the drilling units.
News of its potential oil discovery came as Cairn released half-year results showing underlying pre-tax profits of 88 million US dollars (£11.6 million) in the six months to June 30.