UPDATE 1-Oil firms pile in as Norway moves exploration closer to Russia

(Adds comments by minister, applicants, background)

OSLO, Dec 4 (Reuters) - Norway has received applicationsfrom 26 oil firms seeking drilling permissions in a licensinground set to move the search for hydrocarbons closer to itsborder with Russia, the country's Oil and Energy Ministry saidon Friday.

Competition for many of the blocks had been fierce, theministry said, not least in the previously unexplored easternpart of the Barents Sea where Norway settled a 40-year borderdispute with Russia in 2010.

Around 55 percent of the oil and gas resources on theNorwegian continental shelf are yet to be produced, and of that40 percent lie in the Barents Sea, according to an estimate bythe country's petroleum directorate.

"It bodes well for the future of petroleum activity in thenorth that a wide diversity of companies compete for new acreagein the Barents Sea," Oil and Energy Minister Tord Lien said in astatement. The ministry declined further comment on which areashad been most popular.

Applicants in the so-called 23rd round, which is mostlyfocused on the Arctic Barents Sea, include Statoil,Shell, Lundin Petroleum, BP andChevron among others.

Majors who did not apply include ExxonMobil and Total

Russian companies like Lukoil and DEA, owned byRussian billionaire Mikhail Fridman's investment fund LetterOne,also applied. The list included two newcomers to the Norwegiancontinental shelf - Japan's Inpex and Kuwait ForeignPetroleum Exploration Company (Kufpec).

Norway had invited oil firms to apply for stakes in 57blocks in previously unexplored areas. Awards are expected inthe first half of next year, and drilling could start in 2017,the ministry said.

The Barents Sea is considered a costly area to develop duepartly to the lack of infrastructure. Statoil this year delayeda final investment decision on its Arctic Castberg field, one ofthe world's northernmost oil finds, to cut costs.

Statoil's Snoehvit gas field, in the Barents Sea, is so farNorway's only Arctic offshore field in production. The first oilfield is expected to be Eni's Goliat field which is dueto start producing oil before the end of 2015. The field wasoriginally scheduled to start in November 2013, but has beendelayed several times since. ENI did not apply in the newlicensing round.

While Norway frequently hands out additional acreage fordrilling, the latest round was the first since 1994 to move intoa new geographical area. (Reporting by Stine Jacobsen and Terje Solsvik, editing byGwladys Fouche and Susan Thomas)