MercoPress. South Atlantic News Agency

Argos warned by Argentina to abstain from drilling in the Falklands or…

Argos is the fifth company to decide offshore drilling in the Falklands

Argos Resources the latest company to announce it will begin oil exploration operations offshore the Falkland Islands was sent a letter by the Argentine embassy in London warning it “to abstain” from such activities otherwise “it will face legal actions”, according to reports in the Buenos Aires press.

Quoting Argentine Foreign affairs ministry sources La Nacion says that as happened with the other four British oil companies operating in the disputed Falkland Islands, Argos Resources was warned to abstain because the exploration licences unilaterally extended by the Falklands’ government are “illegal and illegitimate”.

Argos Resources is the fifth company to join the current Falklands’ oil round together with Desire Petroleum, Rockhopper Exploration, Falkland Oil and Gas Ltd and Borders & Southern Petroleum.

Argos Resources said it plans to drill for oil in the Falklands waters once it raises £ 70 million in a London stock market listing. People close to the company said Argos began pre-marketing the share offering to investors this week with broker Evolution.

The importance of Argos Resources announcement is that it holds licences next to the landmark 250 million barrel Falklands oil discovery made by peer Rockhopper Exploration last May. Three other British companies Desire Petroleum, Rockhopper Exploration and Falkland Oil and Gas Ltd raised almost £ 150 million to fund their drilling campaigns.

Argos Resources formed in 1995, is led by John Hogan, who worked on Lasmo’s attempts to find Falklands oil in 1998. Ian Thomson is the company’s chairman and founder. Hogan is a geologist considered an expert in Falklands’ prospects. The 1998 exploration drilling round was abandoned because oil prices at the time plummeted to 10 US dollars a barrel.

Proceeds from the Argos IPO will be used to shoot 3D seismic data and to fund exploration. It is not clear whether Argos will attempt to use the Ocean Guardian drilling rig being used by oil explorers on the Islands, or if it plans to use another rig at a later date.

Argos Resources holds Production License 001, which comprises six blocks in the North Falkland Basin, previously operated by Amerada Hess and then by Evergreen Resources. Two wells were drilled in the license back in 1998 both testing essentially the same prospect/play type. Argos recognizes eight potential prospects in waters less than 500 meters deep and with reserves ranging between 50 and 800 million barrels of recoverable reserves.

Since exploration around the islands began this year, Argentina has tried by all means to make it difficult for companies to move in equipment and supplies by requiring special shipping permits to cross Argentine waters to the Falklands.

Lawmakers in Buenos Aires have also approved a bill to impose sanctions on any companies working in Argentina with links to the Falklands’ exploration program. The bill was passed unanimously in the lower house and is expected to be ratified by the Senate.

Argentina claims London has put itself above international law by ignoring international calls to comply with a United Nations resolution urging sovereignty negotiations by both sides. Britain argues that the Islanders have the right to self determination, enshrined in the UN charter, and to develop their own hydrocarbons industry for which London will give all the necessary support.