Falklands’ oil deal with Chile much depends on Sunday’s election

Chile’s government owned oil and gas corporation Enap has a renowned expertise and a vast experience in hydrocarbons exploration and exploitation in the extreme south of the country and in the last few months has been approached by FOGL.

Forni who is also a member of the Mines and Energy Committee said that “Piñera will always look for what is best for the country, and if a strategic alliance between a British company and one belonging to the Chilean state is useful, well I see no inconvenience as long as it does not influence our relations with other countries”.

The issue is highly sensitive and has triggered immediate reactions from Argentina’s Foreign Affairs and Federal Planning ministries given the British Argentine dispute over the South Atlantic islands sovereignty.

After all “with or without the signing of such an agreement, which would help diversify Chile’s energy equation, we are not going to give the Malvinas back to Argentina nor are we going to ensure Britain’s sovereignty over the Islands”, said Forni.

“Yes the Argentines might feel annoyed, the same way we felt when they did not honour the natural gas protocol back in 2004 and cut supplies to Chile. We don’t have to feel weak. If the British are inviting us for such a deal, it’s the obligation of Enap to consider and assess it. I think it’s a mistake to mix issues such as our Foreign Affairs ministry has done. We have nothing to do with the problems between Argentina and Britain”, he emphasized.

Nevertheless from the Argentine side things are not that simple since in the event of an association between Enap and FOGL, there would be trade problems for both countries.

Federal Planning Minister Julio De Vido recalled the existence of resolution 407/2007 which impedes companies operating in the Falklands, to do so in Argentine territory.

Enap and its international branch Sipetrol is involved with Repsol-YPF in several wells in the Magallanes area (CAM-2A-Sur, CAM-3 and CAM-1) and in the San Jorge Gulf basin.

Forni said the Chilean government reaction was too categorical, too immediate “and what I’m saying is that in energy issues any diversification of our production equation in conjunction with other countries is essential”.

“Yes, there’s a sovereignty problem which is bilateral between Argentina and the UK, and something completely different is commercial integration, exchanging ideas particularly in the oil industry which I repeat is essential for Chile”, said Forni who is running for Senator next Sunday.

“Let us not forget that when we most needed natural gas, we didn’t get it and the Kirchner government told us straight in the face that the 1995 contract would not be honoured, I thing we are talking of double standards” insisted Forni.

The Chilean government was quick to emphasize that the country’s policy has always been of unrestricted support to Argentina’s sovereignty claims over the Malvinas, South Georgia, South Sandwich Islands and adjoining maritime spaces.

Chilean oil industry sources quoted in the Santiago press said that President Michelle Bachelet is leaving in 90 days and certainly does not want to start a dispute with Argentina, therefore her quick reaction. Anyhow by next March if Mr. Piñera is effectively elected Chile’s next president, it could be a different ball game.