MercoPress. South Atlantic News Agency

“Let's look after the oil” in Falklands

The hypotheses of a promising oil future for the Falklands has to be approached as “likely” and therefore must necessarily be included in “the permanent and priority agenda of our sovereignty rights over the Islands” writes Jorge Lapeña, a former Energy Secretary in this Monday's “Clarín” edition.

According to Mr. Lapeña the sedimentary basins surrounding the Islands are among the few unexplored provinces left in the world and given their extension and thickness, have a great hydrocarbons potential in significant quantities, involving possibly millions of dollars for years to come.

Mr. Lapeña's approach in his article titled "Malvinas: let's look after the oil", seems very much in line with recent argumentation from the new president Nestor Kirchner administration policy claiming that Falklanders enjoy enviable living standards (among the highest in the world) with the income earned from fishing licences in the disputed South Atlantic (Mar Argentino) territories and waters.

Mr. Lapeña praises the current Argentine government for having included Malvinas in the top priority agenda of the country, but also points out that the pos-1982 status quo situation regarding (non) sovereignty talks with London, has had strong economic benefits for the Islanders and inversely detrimental for Argentine interests that necessarily must be taken into account in the claim.

And this is where oil comes in particularly since hydrocarbons licensing is long term, contrary to annually with fisheries.

Well informed about the Falklands recent exploration licensing process and the six exploratory drillings of 1998 in the north Falklands basin, of which five had "traces of oil and gas" although none in commercial volumes, Mr. Lapeña warns that this could be "anticipating successful future operations".

Further on he explains that in 2002 the Falklands government expanded its oil interests with the "open door" policy that attracted an Australian consortium that was awarded exploration licences in the south Falklands basin and the eastern plateau.

Mr. Lapeña then argues that the Falklands designated areas for hydrocarbons operations far exceed the Islands (12,000 sq. km.) and are equivalent to 400,000 sq. km., an area similar to the Argentine provinces of Chubut and Santa Cruz, or to Texas in the US or 50% more than the North Sea oil basin. Argentina's most productive hydrocarbons basin extending over three provinces has only 124,000 sq. km. points out Mr. Lapeña.

On the legal side the Argentine former Energy Minister underlines that the oil licensing is ruled entirely by Falklands law and regulations, (not UK) and even when all foreign companies are welcome, there's a specific discrimination towards Argentine investors that are limited to a 49% share and no Argentine operators.

As to how long term the Falklands licensing process is (and therefore interfering with any future sovereignty talks), Mr. Lapeña states that the 1996 licences can reach 56 years (22 for exploration and 35 for exploitation), while the "open door" farming 48 years.

If any of these undertakings is successful and given the 50% share that belongs to the Falklands government, in a 100 million cubic metres oil deposit, Mr. Lapeña speculates that this could represent over 7,5 billion US dollars, or 3,7 million US dollars per capita.

Therefore taking into account the economic potential of the Falklands and surrounding waters, even when it's up to the future to effectively confirm it "in defence of national (Argentine) interests we must adopt the hypotheses of the likely existence of such wealth to sustain the claims over which by history we have full rights. The issue must then be part of the permanent and priority agenda for the recovery of our sovereignty rights".