MercoPress. South Atlantic News Agency

Argentina looking for mainland business links of Falkland oil companies

Minera Lumbrera a major copper and gold undertaking in northern Argentina

The Argentine government is looking into the British oil companies involved in the Falkland Islands exploratory drilling operation checking on their possible links to interests in Argentina (and if so the infringement of legislation of Argentine legislation), according to reports in the Buenos Aires press.

Primary information leaked to the press indicates that the four companies holding Falklands’ government licenses to explore and later exploit hydrocarbons, Desire Petroleum, Falkland Oil & Gas Ltd., Rockhopper Exploration and Borders & Southern Petroleum effectively have through share holders or directly significant investments in Argentina.

The first three companies are in line ready to begin drilling next week when the “Ocean Guardian” oil rig arrives to the North Falkland basin. Borders & Southern has yet to decide.

Apparently Desire Petroleum and Borders & Southern Petroleum have a common shareholder, Barclays Ltd, which happens to be one of the banks selected by Argentine authorities to manage a deal with the holdouts of the 2002 sovereign defaulted bonds, (estimated in 20 billion US dollars) that limit access to voluntary international markets forcing Argentina to pay “exorbitant interest rates”.

Precisely the current Argentine central bank controversy was triggered when the administration of President Cristina Kirchner announced the creation of a Bicentennial Fund, with central bank reserves, which among other things would act as collateral for the negotiations with bond holders.

Borders & Southern Petroleum allegedly is also linked to some of the companies which exploit the Minera Lumbrea copper and gold mines in northern Argentina. Minera Lumbrera ranks as the tenth minerals exporter of Argentina.

Falkland Oil & Gas Ltd’s associate Anglo-Australian BHP Billiton is one of the world’s leading mining companies and is also involved in copper exploratory mining in the north of Argentina.

Finally Rockhopper Exploration has as one of its financial advisors the HSBC banking group, which has an extended network in Argentina.

Last week a former member of the Argentine Congress made a formal presentation before a criminal court against the Argentine Ministries of Economy and Foreign Affairs for having nominated Barclays as global coordinator for the opening of the sovereign bonds swap

“This financial institution is a strong stock holder of Desire Petroleum and holds a percentage of BlackRock, which is part of Switzerland’s Xstrata involved in the exploitation of Minera Lumbrera and one of the companies that controls Borders & Southern Petroleum”, said Mario Cafiero.

However it is not clear yet how the Argentine government could “intimidate” major corporations or financial institutions without further deteriorating its international image in business affairs when it is trying a comeback to world money markets.