MercoPress. South Atlantic News Agency

FOGL trying to tempt Chilean companies to join Falklands’ oil exploration

Tim Bushell and David Hudd recently visited Chile according to the Santiago press

Senior executives from Falkland Oil and Gas Limited (FOGL), which operates in the Falkland Islands, where it just announced the existence of significant oil reserves tempted Chile's State Oil Company (ENAP) into entering the business to help them explore and develop a 49,000 square meter basin in the South Atlantic.

According to reports in the Chilean press ENAP has shown no apparent interest to enter a business where there is uncertainty and that would involve huge costs.

The reports indicate that last October FOGL CEO Tim Bushell visited ENAP and in November Deputy Chairman David Hudd also travelled to Chile. “The two top executives believe Enap is the natural partner for FOGL because of geography and logistics, since the company has operations in Magallanes region”, extreme south of Chile

Chilean oil industry sources admit that the interest of FOGL is “to include a strategic partner for the exploitation of the oil reserves. The ideal partner in Chile is Enap”. They also confirmed that Bushell and Hudd recently visited Chile.

However for Enap the proposal would not be viable and the discussions are no more than “informal contacts”. Exploration costs would be astronomical and not economical, and in addition to that, it would create “a conflict with the Argentine government”.

Apparently Enap was not the only oil company in the region visited by FOGL executives or with which they have had talks.

“FOGL is disappointed by the lukewarm reception from Enap given the huge possibilities of reaching an agreement to extract oil from the region in the future. A similar attitude was experienced by company officials when they met with representatives from other Chilean ministries”, points out the Santiago press.

Recent reports by British media said that the Falklands’ off-shore territory could have up to 60 billion barrels of oil underneath its coastal waters.

David Hudd, chairman of Falkland Islands Holdings and vice-chairman of Falkland Oil and Gas, told the Sun: “The benefits are potentially huge for the companies involved, the Falkland Islands and for Britain.”

Telegraph.co.uk reported that earlier this year UK Prime Minister Gordon Brown said he would not surrender the sovereignty of the Falklands.

FOGL has Falklands’ franchises in partnership with BHP Billiton, the huge minerals consortium that also has interests in South America.