MercoPress. South Atlantic News Agency

YPF and PDVSA will explore Malvinas continental shelf for oil, says Pagina 12

YPF Miguel Galuccio and PDVSA Rafael Ramirez Carreño

According to reports in the Argentine media, the nationalized Argentine oil company YPF, formerly owned by Spain's Repsol, will be teaming up with Venezuelan oil giant PDVSA to explore the continental shelf around the Falkland/Malvinas Islands for oil.

“We discussed the need for oil and gas exploration in the territory and offshore areas, adjacent to the Malvinas, but we have to analyze the costs and time,” PDVSA president Rafael Ramirez Carreño told Argentine newspaper Pagina 12. He said he had recently spoken with the president of YPF, Miguel Galuccio, on this issue.

Ramirez Carreño said the prospective investments are the result of joint-ventures in Venezuela between the two countries.

However, he added that Venezuela is “proceeding with caution” after a warning by Repsol to companies that partner with YPF after the expropriation of its shares earlier this year. The Spanish company said it reserved the right to take legal action against any investor in YPF or its assets that had been illegally expropriated from Repsol.

Argentina announced in April it was taking control of YPF, seizing a 51% stake from Repsol, a decision supported by Venezuelan President Hugo Chavez.

This is the latest in a series of moves by the current Argentinean President, Cristina Fernandez, to escalate tension over the Falklands on the 30th anniversary of the war fought by the UK and Argentina over the Islands in 1982.

In the face of a campaign of harassment against British interests in Argentina, the UK government tabled a White Paper in June officially pledging to defend the Falklands and declared there would be “no weakening” in the country's resolve over the Falklands.

In one of the latest incidents Britain summoned Argentina's ambassador to London on December 3 after masked men ransacked the offices of a shipping company in Buenos Aires, a move the Foreign Office alleged was aimed at deterring ships from visiting the Falklands. A number of cruise ships have cancelled planned visits to the Falklands under pressure from Argentina.

In April, Argentina sent a letter to 15 UK and US banks warning them of possible civil and criminal charges if they continue work with the five London-listed oil exploration companies involved in drilling in Falklands territorial waters.

The largest company involved, Rockhopper Exploration, sold a 60% stake of its Sea Lion field to Premier Oil in July in return for a 1 billion dollars investment to bring the field into production in 2017. The prospect contains an estimated 320 million barrels of oil.

Noble Energy, a Texas based exploration and production group, is buying interests in licences held by Falklands Oil and Gas off the Falklands’ northern and southern coasts. Over the next three years Noble estimates it will be investing between 180m-230m dollars to develop its interests.