Argentina protests new Falklands exploration program

Feb. 15, 2010
Argentina's government lodged a protest with UK's government over plans by UK firms to begin oil exploration off the north coast of the long-disputed Falkland Islands.

Argentina's government lodged a protest with UK's government over plans by UK firms to begin oil exploration off the north coast of the long-disputed Falkland Islands.

Argentina's Foreign Minister Jorge Taiana said his country "firmly rejects" UK plans for exploration in the Argentine continental shelf area. "We will do everything necessary to defend and preserve our rights," Taiana said.

He reiterated what he called Argentina's "sovereignty over the Falklands, South Georgia, and South Sandwich Islands and adjoining maritime spaces, which are an integral part of its national territory."

Last year, the Argentine foreign ministry presented the UN with 40 volumes of documentation staking the country's claim to 1.7 million sq km of seabed, including the UK overseas territories of the Falklands, South Georgia, and South Sandwich Islands, and a large chunk of Antarctica (OGJ, May 4, 2009, p. 50).

A few weeks later, a consortium led by Repsol YPF SA announced plans for oil and gas exploration in international waters off the Falkland Islands beginning in early 2010 (OGJ Online, June 9, 2009).

However, in his message to the Falkland Islanders in December 2009, British Prime Minister Gordon Brown insisted there was no doubt about British sovereignty over the Falklands, and he promised full support to developing the islands' oil industry.

One of the UK companies exploring for oil and gas in the area, Desire Petroleum PLC, has contracted a rig, the Ocean Guardian, to begin drilling. The rig, owned by Diamond Offshore Drilling Inc., is expected to arrive in mid-February to begin drilling prospects in the North Falkland basin.

Under terms of the contract between Desire Petroleum and Diamond Offshore Drilling, four wells must be completed during a minimum 80-day campaign.

However, Desire Petroleum has secured options to drill a further six wells for itself or its partners, with mobilization and demobilization fees for the rig estimated at $16 million.

Industry sources said three other oil companies would likely lease the same rig for exploration. The firms were identified as Rockhopper Exploration PLC, Borders & Southern Petroleum PLC, and Falkland Oil & Gas Ltd. in association with BHP Billiton Ltd.

British diplomats have little expectation of any direct military action by Argentina, but they are alert to a possible alternative: Argentina using civilian vessels to disrupt the passage of the rig.

The diplomatic flap coincided with recent reports that Argentina's oil and gas production fell in 2009 compared with the previous year, marking the third consecutive decline since 2006.

According to the country's energy secretariat, Argentina produced 36.15 million cu m of oil and 48.41 million cu m of gas, which puts oil production down 4.3% from last year, while gas output dropped 3.7%.

The Falkland Islands, also known as the Islas Malvinas in Spanish, have been under British control since 1833, but Argentina considers them part of its territory. In 1982, the two countries fought a 74-day war over the islands in which almost 1,000 people were killed.

More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com