No Empty Threats From Argentina In Falkland Oil Dispute

Argentina wasn’t joking when it said it would sue to prevent foreign energy companies for drilling off the Falkland Islands.

On April 2 – the 33rd anniversary of the start of Argentina’s 10-week Falklands War with Britain – two British energy companies announced they’d found oil and gas off the South Atlantic islands off Argentina. Almost as expected, the Foreign Ministry in Buenos Aires immediately threatened a lawsuit.

The discovery at the Zebedee well, situated about 200 miles north of the Falklands, was announced April 2 by Britain’s Premier Oil Plc. and Falkland Oil and Gas Ltd. It was the first energy strike in an exploratory campaign in the region that began last summer. The find includes an oil reservoir 81 feet deep and a gas basin 55 feet deep.

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Now it appears Argentina intends to keep these companies, and three others, away from the newly discovered energy cache. In London on April 17, Daniel Filmus, Argentina’s minister for the Falklands – known as Las Malvinas to the Argentines – announced his country has initiated a lawsuit to be heard by a judge in Rio Grande, Argentina.

Besides Premier and Falkland Oil and Gas, the defendants include one additional British company, Rockhopper Exploration Plc., as well as the US companies Noble Energy and Edison International.

At a news conference at the residence of Argentina’s ambassador to the UK, Filmus said his country would prosecute the companies on the basis of unspecified Argentine and international laws. Those found guilty of exploring for oil in what he said were Argentine waters would face between five and 10 years in prison; those convicted of illegal energy extraction would face even longer sentences.

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The Falklands have long been a source of tension between Argentina and Britain, which both claim ownership of the islands. They have been under British control since 1841, but on April 2, 1982, Argentine forces invaded them in an effort to establish sovereignty under Buenos Aires.

Britain responded with a naval task force, and on June 14 Argentina surrendered, returning the islands to British control. The two countries eventually restored full diplomatic relations in 1989, but the ownership of the Falklands remains in dispute.

The British companies’ discovery of oil and gas near the islands has only made matters worse. Ambassadors from each country were summoned by their counterpart to explain their country’s behavior, and British forces in the region held a military drill on April 13.

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Britain went beyond mere symbolic actions. On April 2, the day the discovery was announced, Defense Secretary Michael Fallon announced a strengthening of defenses in the Falklands, including the addition of two Chinook Helicopters and upgraded surface-to-air batteries.

Argentine President Cristina Fernandez de Kirchner condemned this response and vowed to regain control of the islands. “International law and dialogue, not militarization, are the path to a reunion and sovereignty,” she said at the time. “We will see the islands form part of our territory again. It’s not just wishful thinking.”

Even if she gets her wish, though, she may gain a territory with a reluctant population. In 2013, residents of the Falklands voted 1,513 to 3 to remain under British control.

By Andy Tully of Oilprice.com

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