Watching The World: Doing business together

March 8, 2010
If there is anything the oil and gas industry desperately needs, it is business.

If there is anything the oil and gas industry desperately needs, it is business. For that reason, British and Argentinean officials should stop touting their respective rights in the South Atlantic and think of doing business together out there.

Is the idea unthinkable? Certainly not, as shown in a recent announcement by Spanish-Argentine oil group Repsol-YPF SA that it plans to start drilling for oil in the Falklands basin by yearend.

According to a company spokesperson, Repsol YPF's drilling will take place within Argentine territorial waters and "far from the disputed waters" around the British-ruled Falkland Islands, which Argentina also claims.

"We're now in the phase of contracting the oil rig," said Repsol YPF's Chief Executive Officer Antonio Brufau, adding that the consortium will go ahead with its plans even though exploration in that area is not easy and the probability of success is very "low or limited."

Key point

The key point, though, is not the distance from the Falklands or even the chances of success, but the identity of Repsol YPF's partners: Brazil's Petroleo Brasileiro SA (Petrobras) and Pan American Energy, a joint venture of Petrobras and—guess who?—the UK's BP PLC.

Clearly, if a British firm and an Spanish-Argentinean firm can work together in exploration of the South Atlantic in the region of the Falkland Islands, then it should be possible for even greater cooperation between the two sides.

But that's not how the scenario is playing out, either in the UK or in Argentina. Indeed, the new Falklands dispute has revived tensions which exploded in 1982 when Argentinean troops staged a surprise landing on the islands to assert their claim to the territory.

The result of that landing, in case anyone needs a reminder, was a 74-day war between the two sides in which 649 Argentine and 255 British soldiers, sailors, and airmen died. Those figures are, or should be, enough to keep both sides talking.

60 billion bbl

So far, though, the only talking has been the kind that keeps the two sides apart. Argentine President Cristina Kirchner signed a decree ordering any ship passing through Argentine waters to request permission before going to the Falklands.

More recently, Kirchener's Foreign Minister, Jorge Taiana, pressed United Nations chief Ban Ki-moon to intervene in the dispute in order to prevent Britain from any further "unilateral acts."

But Britain's UN ambassador Mark Lyall Grant reaffirmed his country's rights in the area as "underpinned by the principle of self-determination as set out in the UN Charter."

Such remarks are bound to keep everyone talking with anyone who'll listen, and there are plenty of those. But such remarks are not going to achieve what is really necessary in the region: peaceful exploration for the oil and gas needed on world markets, estimated by the British Geological Society at 60 billion bbl.

Surely, there is plenty of business in those waters for both sides.

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