Falklands’ oil explorer says deal with US company is “not politically motivated”
The Chief Executive of Falkland Oil and Gas Ltd, FOGL, has said that its farm out agreement with Texas based US firm Noble Energy is not “politically motivated”, according to a report by the Daily Telegraph.
On Monday it was announced that FOGL had reached an agreement with Noble Energy to search for oil south and east of the Falklands in an operation that could involve up to 230 million dollars in 10 million acres of exploration licences.
The move follows a subsidiary of French energy giant EDF also buying into FOGL licences earlier this year.
According to Daily Telegraph, analysts have said it is significant that Noble Energy has decided to invest in the Falklands, when the US administration has refused to endorse British sovereignty of the Falkland Islands.
Argentina which claims sovereignty over the Falklands/Malvinas has threatened to sue companies involved in oil exploration in what it considers Argentina’s continental shelf and has repeatedly notified stock markets in the US and Europe.
Ian McLelland of Edison Investment Research said that some companies have avoided entering the Falklands because of its geographical location and in particular this would affect companies with direct exposure to Latin America but potentially also those with more general investment in the Americas.
But McLelland said that the fact that a US company like Noble is entering the region is therefore of significance.
FOGL chief executive Tim Bushell pointed out that its choice of Noble had not been “politically motivated”, but added he thought any US company looking to invest anywhere new in the world would first seek advice from the US State Department.
The Daily Telegraph said that neither Noble nor the US State Department commented on the “political” issue, but Noble said that “after careful study” it believed the region was “very consistent” with its strategy
In the FOGL release Monday 6 August CEO of Noble Energy Charles D. Davidson is quoted stating that “after careful study, we believe this region is very consistent with our new ventures exploration strategy of entering regions that provide prospects that are not only material in size, but also where initial success can de-risk subsequent opportunities. In this particular case we have already identified numerous oil leads on 2D data with an un-risked gross resource potential exceeding 6 billion barrels of oil”.
The Obama administration maintains a position of “neutrality”, saying it recognizes the “de facto UK administration” but takes no position on sovereignty claims.