Argentina Plans Asset Seizure Of Falkland Oil Companies

Is it just election fever, or is Argentina serious about reclaiming the Falklands Islands?

Presidential elections loom in the country in October, so perhaps it’s not surprising that a Lilian Herraez, a federal judge in Tierra del Fuego, Argentina’s southernmost region, ordered the seizure of $156 million in property and bank holdings of oil drilling companies, including Noble Energy of the United States.

The government in Buenos Aires said on June 27 that the other targets of asset seizures were Edison International of Italy and three British-based companies, Falkland Oil and Gas Ltd., Premier Oil Plc and Rockhopper Exploration Plc.

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Reuters quoted a source which it said was knowledgeable of the situation as saying none of these four companies tends to have financial holdings in Argentina or to work in Argentine waters. But a statement by prosecutors said Noble Energy “has a local office registered in Argentina,” and that its assets there would be frozen.

“The [Argentine] foreign ministry will be notified of the court order so that by diplomatic means and in compliance with international treaties it can be carried out,” the statement said.

The Falklands, an archipelago within 450 miles of the Argentine mainland, have been under British rule continuously since 1833. Buenos Aires still claims the islands, which they call the Malvinas, as its territory, although a majority of the islands’ approximately 3,000 residents say they prefer to remain under British rule.

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In 1982, Argentina’s military dictatorship tried to seize the Falklands from Britain, but were beaten back during a brief war. The matter was considered settled for nearly 30 years when oil deposits were discovered in the vicinity of the archipelago, due east of Tierra del Fuego. Drilling in the waters around the islands began in 2010 over the objections of the Argentine government.

The prosecutors had asked Herraez on June 1 to fine the energy companies and to order the seizure of five ships, a drilling platform and what is known as a floating dam. They argued that all these assets had been used to conduct illegal exploration and exploitation of Argentine waters.

In her order, Herraez granted a request by prosecutors that she order the energy companies to end exploration of Argentine waters for fear of a negative environmental impact on them.

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The Buenos Aires Herald quoted government sources as saying they doubted Herraez’s order could be enforced because the judge’s jurisdiction doesn’t include the Falklands and because that jurisdiction doesn’t extend to the countries in which the companies are based.

Government prosecutors, however, say they believe the judge’s ruling will carry weight. “I strongly believe the judge’s resolution is going to have a practical effect,” said one, Carlos Gonella, the head of the Attorney General’s Economic Crime and Money Laundering Unit. He didn’t elaborate.

But will oil drilling off the Falklands remain a political issue in Argentina once the October election are past?

By Andy Tully of Oilprice.com

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