The political noise stirred up by Argentina over the Falkland Islands will not deter big energy firms from investing in the region if there is enough oil found to make it worthwhile, said the chief executive of exploration company Falkland Oil & Gas.
It's not the politics that are stopping the companies coming in, it's the fact that no-one has yet made big, world-class discoveries the company's the company's chief executive Tim Bushell said in an interview with Reuters on Tuesday.
FOGL, due to drill a well off the south of the islands in less than two months, is close to finalising a deal to bring in an unnamed partner to help it explore its licences, Bushell said.
He described the group as a listed independent oil firm, referring to the tier of companies below the biggest international oil firms or oil majors.
At the moment, there's no reason to suspect that it's not going to happen, Bushell said, referring to the option arrangement signed with the unnamed group in March.
Named Loligo after the squid which is fished in Falklands’ waters, the well could hold up to 4.7 billion barrels of oil, said Bushell.
Bushell is confident that should oil and gas be found in sufficient quantities, the politically sensitive nature of the region won't stop oil majors from investing to get the oil pumping potentially transforming the Falklands, which are heavily reliant on fishing.
Another British explorer, Rockhopper, has found an oil field to the north of the Falklands and is trying to secure a partner to help fund the 2 billion dollars development of the field, but the process is taking longer than the three months it originally guided.
What big oil companies want is not only one big discovery, they want a big area where there's lots of follow-on so that they can go and set up a business there that's going to be there for 30 years. The southern basin could have that added Bushell.
Leading the charge to explore the southern Falkland basin is Borders & Southern, which made a significant discovery of gas condensate at its Darwin prospect in April something Bushell said was a big positive for FOGL.
We're excited about it because we have five, maybe even six things that look just like Darwin literally across the licence boundary, he said.
Bushell shrugged off the notion that finding gas in the Falkland Islands would be uneconomic to develop, pointing to the example of East Africa, where huge finds have been made and plans are underway to extract it.
Oil tends to be cheaper to develop in remote locations as a floating production operation can be installed and it can be more readily transported, whereas transporting gas requires the building of costly facilities to freeze the gas into liquefied natural gas.
However there is a strong political component since any further discoveries in the Falklands will likely prompt more hostility from Argentina, coming at a time when the country is intensely focused on its own resources, having nationalised oil firm YPF in a move to boost production and keep up with domestic demand.
Precisely last week the Indian government asked the country’s main oil and gas corporation, ONGC Videsh Limited to desist from its acquisition of hydrocarbon assets located in the Falkland Islands.
Indian Ministry of External Affairs instruction to OVL came after the company had sought clearance from the Ministry for making bids for two oil and gas blocks in a farm in deal with Falkland Oil and Gas Limited (FOGL).