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Argentina can Only Look on as Falkland Islands Set to Produce Hydrocarbons

Borders and Southern Petroleum (BOR: LN), the British oil exploration company, yesterday announced that the reserve of gas condensate it discovered in the Falkland Islands back in April 2012 is both commercially and technically viable.

Share prices for Borders and Southern Petroleum rose 12.5% to 27.37 pence when the news was released that initial studies had deemed viable the development of the gas condensate, a liquid form of gas that trades at a premium to natural gas.

The field is not yet ready to start production as more appraisal drilling, at an estimated cost of around $1.6 billion to $3.8 billion, is needed to fully determine the potential of the play. The exploration company is already looking for partners to share in the next drilling period.

Related article: Does 2013 Herald an Oil Supply Crisis?

The problem is that the Darwin discovery (as it’s known) is situated in a remote location in the South Atlantic far from any markets; so whilst it may be technologically viable to extract, it must be a large deposit for it to also make economic sense.

The Falkland Islands have been under British rule since 1833, yet Argentina have always contested their rule, claiming them as their own, and even invading the small colony in 1982 to try and take control by force. Argentina’s hostility has not deterred companies from exploring the islands hydrocarbon potential, which are expected to start producing their first oil in 2017.

By. Joao Peixe of Oilprice.com



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  • Mike on February 01 2013 said:
    Argentina abandoned their claim to the Falkland in 1850 when they ratified the Arana-Southern Treaty, aka The Convention of Settlement.

    The Nootka Sound Convention referred to adjacent islands: Vancouver Island is adjacent ... Tierra del Fuego is adjacent ... the Falklands are pelagic.
  • BritBob on January 30 2013 said:
    And after signing the 'Convention of Settlement' treaty in 1850 Argentina waited until 1941 to make another sovereignty protest - under international law sovereignty protests are usually considered defuct if there is a gap of 50 years or more between protests. The Argentine government also produced tens of thousands of maps for its consulates in the 1870s and 1880s such as the '1882 Latzina Map' (successfully used by Chile in their Beagle Island Dispute with Argentina) that either omitted the Falkland Islands from its territory or showed the islands in a different colour.
  • BritBob on January 30 2013 said:
    The Nootka Sound agreement signed long before Argentina existed as an entity was followed by the 1850 'Convention of Settlement' peace treaty signed by Great Britain and the Argentine Federation. The treaty was entitled 'Convention Between Great Britain and the Argentine Confederation For the Settlement of Existing Differences and the Reestablishment of Friendship. In part 1v of the treaty both countries acknowledged that 'perfect friendship had been restored to its former state of good understanding and coordiality.' Although the treaty does not mention the Falklands it is a principle that in a peace treaty ANY matters not mentioned are fixed by the treaty in the state in which the treaty was signed.
  • Matias on January 30 2013 said:
    Malvinas islands belong to Argentina...UK has no claim since the UK recognized the Spanish sovereignty over the islands in the Nootka Sound Convention...And by Utis Possidetis and Res Derelictae, the islands were inherited by Argentina
  • BritBob on January 30 2013 said:
    The article is completely true. The British first claimed the Falklands in 1765. After various attempts to set up a colony Vernet was given permission by Britain to set up a business venture on the islands. He later switched allegiance to Argentina and turned his hand to piracy. While Vernet and the small Argentine garrison were asked to leave by the British in 1833, the vast majority of settlers chose to stay under the British flag. Just like the people of the Canary islands do not wish to become a colony of Morocco, the 3,000 Falkland islanders do not wish to become an Argentine colony. The Falkland Islanders have the right to seld determination - this was confirmed by the Secretary General of the UN last November. The Argentine claim to the Falkland Islands is based on proximity only and has no moral nor legal basis. www.falklandshistory.org/
  • Paul on January 30 2013 said:
    Argentina has not always contested the ownership of the Islands. Between 1850 when Argentina and Britain signed a peace treaty agreeing they had no disputes and the 1930s when growing support for Hitler and Mussolini by German &Italian; settlers led to an increase in anti-British feeling Argentina made no claim of ownership of the Islands. The current claim is kept alive in Argentina by a mixture of inflammatory statements by politicians looking to cover up corruption and divert attention from economic failure and a program of falsified history being taught in Argentine schools.

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