MercoPress. South Atlantic News Agency

Desire confirms exploratory drilling in 2006

Desire Petroleum is set to begin early 2006 exploratory drilling in the Falkland Islands northern basin with an overall investment of forty million US dollars, reports the Argentine press.

In a phone interview with Clarin, Mr. Colin Phipps, Desire's president said offshore drilling in three wells has been encouraged by recent tri-dimensional surveys in the north of the Islands which indicate the zone has at least "a billion barrels of crude waiting to be exploited".

Mr. Phipps added that the billion barrels represent a 25/30 years oil reserve, and if successfully exploited will generate a daily income for the Islanders of half a million US dollar, -royalties and taxes-, adding up to 182 million dollars annually, to be shared among the 2,500 inhabitants.

Clarin recalls that since the 1982 war Islanders became immensely rich with the sale of fisheries licences but the diminishing squid catches have forced the Falklands government to look for other options such hydrocarbons offshore but also gold and diamonds on shore.

In 1998, four oil companies, including Desire, drilled six wells in the northern basin with signs of oil but not commercially viable. At the time according to Mr. Phipps 100 million US dollars were invested, of which Desire participated with 30 million, but further plans were cancelled when the international price of oil dropped to 10 US dollars per barrel. All drilling took place in the 150/200 miles South Atlantic area adjacent to the Falklands.

With price of oil averaging 50 US dollars per barrel companies are returning to the Islands and Desire is confident, based on the data from the northern basin, of the existence of huge deposits of hydrocarbons.

Desire will be the first company to begin exploratory drilling in the margins of the basin, in this new stage, since other companies also present, such as Falkland Islands Oil & Gas Limited and Borders and Southern, have plans for 2007 and 2008.

Clarin finally reports that Desire Petroleum is currently involved in the search for an oil rig, probably from Brazil. The operation, involving a "serious environmental risk", will need 100 men working offshore and another fifteen in Stanley (Puerto Argentino).