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Thursday, January 19, 2012

International Thursday #2 : It's the Falklands--or the Malvinas--Again !

What's the big deal about the Malvinas, or if you prefer, the Falkland Islands ?  What's at stake there, besides national pride and maybe a few tons of fish, in the year 2012 ?

Glad you asked.

Oil, baby, oil.

As BLOOMBERG's Brian Swint reports,
Oil explorers are targeting 8.3 billion barrels in the waters around the islands this year, three times the U.K.’s reserves. Borders & Southern Petroleum Plc (BOR) will drill the Stebbing prospect next month, one of three Falkland wells that Morgan Stanley ranks among the world’s top 15 offshore prospects this year. Meanwhile, Rockhopper Exploration Plc (RKH) is seeking $2 billion from a larger oil company to develop the Sea Lion field, the islands’ first economically viable oil find.  
“The area is underexplored and highly prospective,” said New York-based Morgan Stanley analyst Evan Calio. “These could be like the high-impact wells in Ghana and Brazil a few years ago that opened up a whole host of basins.” 
A major drilling success will further raise the political temperature as Argentina maintains its claim over the U.K’s South Atlantic territory, 300 miles (483 kilometers) from the Latin American coast. President Cristina Fernandez de Kirchner said Britain is taking her country’s resources, while Thatcher’s successor David Cameron yesterday accused Argentina of a “colonialist” attitude that didn’t account for islanders’ rights.  
[Prime Minister] Cameron has approved contingency plans to bolster U.K. troops on the islands, and Prince William, a search and rescue pilot and the second in line to the British throne, may spend six weeks there this year, the Times reported today in London.
Tensions between the Brits and Argentinians over this oil have been building for some time, exacerbated as plans by a British company to drill in the area advanced, according to Rory Carroll and Annie Kelly of the GUARDIAN (Feburary, 2010) :
"What they are doing is illegitimate," said Jorge Taiana, the foreign minister. "It's a violation of our sovereignty. We will do everything possible to defend and preserve our rights."
Last week the government summoned Britain's chargé d'affaires Рthe ambassador was out of the country Рto receive a protest note. Buenos Aires has reportedly warned Argentina-based oil companies against exploring waters around the Falklands and there are rumours it may use civilian vessels to disrupt the rig.
British diplomats brushed aside the protests and said it was longstanding UK policy to let the Falkland Islands government develop a hydrocarbons industry within its waters. They did not expect any Argentinian military forays.
Authorities on the islands were also unconcerned. "There will be quite a bit of rhetoric and Argentina has every right to protest if it wishes. But it will no doubt conduct itself in a proper manner," said Rendell. She was unaware of any plans by Buenos Aires to disrupt drilling.
And in December of 2011, Sara Miller Llana of the CHRISTIAN SCIENCE MONITOR reported that the nations of South American trading bloc Mercosur--Brazil, Paraguay, Uruguay and Argentina -- announced they would bar Falklands-flagged vessels from their ports.