The licensing round will open on May 17 and close on February 17, 2018, the government said in a statement published late Wednesday.
"It's just a question of time until we discover quantities large enough to exploit commercially," Niels Christian Nolsøe, director of the Faroese Geological Survey, said in the statement.
The North Atlantic archipelago, home to around 50,000 people, neighbours the Shetland Islands, which discovered oil in their waters in the 1970s.
Nine exploratory drillings have been made in the Faroese underground since 2000, without any significant results.
Nolsøe said, however, that nine wells were not enough, and was confident that profitable quantities of oil and gas would be found within the next decade.
"We have developed a lot of knowledge about the Faroese underground. We know there's an active hydrocarbon regime. All of the systems, which produce and store oil, are present. We've also found traces of hydrocarbon," he said.
The Faroe Islands, which are not part of the European Union, has an economy heavily dependent on the fisheries sector and subsidies from Denmark.
The Faroe Islands plan to hold a referendum in April 2018 on a new constitution that would give the autonomous territory the right to self-determination.