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Damn traitorous foreign freak of a president. Argentina wants the Falklands due to the recent oil and gas discoveries offshore
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The Falkland Islands: Oil and Gas Exploration’s Newest Frontier

April 9, 2012
Peter Kiernan
There is no shortage of new frontiers for oil and gas exploration these days. The latest frontier attracting attention is offshore oil and gas in the Falkland Islands, a self-governing UK territory in the South Atlantic Ocean, just 460km from the coastline of Argentina. March 2012 marks the thirtieth anniversary of the failed Argentinian invasion of the Falklands; the commercial discovery of oil by Rockhopper Exploration gives this already thorny geopolitical dispute a complicated energy-security dimension.
Argentina has never given up its claim to the Falklands, which have been controlled by Britain since 1833. While it is very unlikely that another British-Argentine war will erupt over the Falklands, the heightened prospects of its offshore oil potential raise the diplomatic stakes between the UK and Argentina.
The Falklands was long considered a region with significant hydrocarbons potential, yet until recently no commercial discoveries were made. According to advisory firm Edison Investment Research, a drilling campaign in 1998 resulted in evidence of oil but no commercial discoveries. However, in 2010 the UK Independent outfit, Rockhopper Exploration, made a major discovery, Sea Lion, in the shallow-water North Falkland Basin. Last year, Rockhopper announced that an appraisal put its Sea Lion discovery at nearly 450 million barrels (mbbls), a substantial amount that gives it commercial viability.
According to Edison, production at Sea Lion could start in 2016 and yield output of 120,000 barrels per day (b/d). The UK Independent is seeking a partner to help it develop the field, which it estimates could cost around $2bn. Other than Rockhopper, two other independents own licences in the North Falkland Basin: Argos Resources and Desire Petroleum.
The South Falklands Basin, which is under-explored, may also harbour significant oil and gas resources. Once again, small independent outfits are doing the exploration work, with Southern and Borders Petroleum beginning a drilling program in January 2012. Falkland Oil and Gas will also drill two wells this year. Unlike the North Falkland Basin, the South Falkland Basin will require deepwater drilling. Still, the basin is thought to be highly prospective, perhaps more so than the northern basin where Rockhopper made its find.
With the Falklands evolving into an offshore energy producing area, tensions between the UK and Argentina over sovereignty of the islands will rise. Argentina has been pressing for sovereignty over the Falklands since 2009, just when UK oil companies began to step up oil exploration plans in the region. Tensions were stoked in December 2011 when Argentina persuaded its partners in Mercado Común del Sur (Mercosur, the Southern Cone customs union)—Brazil, Paraguay and Uruguay—to ban Falklands-flagged vessels in their ports, a decision interpreted as an attempt to isolate the islands economically.
Argentina’s president, Cristina Fernández de Kirchner, said she will not enact further measures to isolate the islands, such as prohibiting the one regular flight between the Falklands and the South American mainland which originates in Chile and travels through Argentinian airspace. Instead, she is seeking to convince the UN’s member nations of the legitimacy of the Argentinian case, with the objective of increasing diplomatic pressure on the UK to negotiate over the issue.
Although the UK may be willing to negotiate at some point on trade and investment co-operation, there is little chance that it will agree to any debate on sovereignty over the islands. Argentina, by contrast, is unwilling to negotiate on trade and investment issues unless they are accompanied by talks on sovereignty. With the British and Argentinian positions unlikely to soften, periodic disputes will continue to occur. The risk of a militarisation of the conflict remains low, but Ms Kirchner’s rallying of nationalist sentiment in Argentina carries a risk that she might make life difficult for companies that do business there. The likelihood of this may increase should there be more commercial oil and gas finds in the Falklands in the coming years.
For the UK, an oil boom in the Falklands would be a welcome revenue source – on the order of billions of dollars a year – which would more than pay for the costs of defence in the territories (nearly $100m annually). The reserve estimate for Sea Lion, around 450mbbls, is about 100mbbls less than the sizable Buzzard field in the UK North Sea, which has been the largest discovery in that offshore region for a long time. Further major discoveries in the South Atlantic would stem the UK’s oil production decline. However, at this early stage of exploration, this remains speculative. If the Falklands is to take off as an oil and gas-producing and exporting region, participation will be needed from bigger players in the industry who can handle the capital costs and deal with the environmental risks of extracting resources in this remote part of the world.
For Argentina, seeing substantial oil production in the Falklands will be a bitter pill to swallow.
http://www.oilgasmonitor.com/falkland-islands-oil-gas-exploration%E2%80%99s-newest-frontier/1714/