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Falklands’ oil explorer says deal with US company is “not politically motivated”

Thursday, August 9th 2012 - 01:34 UTC
Full article 22 comments

The Chief Executive of Falkland Oil and Gas Ltd, FOGL, has said that its farm out agreement with Texas based US firm Noble Energy is not “politically motivated”, according to a report by the Daily Telegraph.

On Monday it was announced that FOGL had reached an agreement with Noble Energy to search for oil south and east of the Falklands in an operation that could involve up to 230 million dollars in 10 million acres of exploration licences.

The move follows a subsidiary of French energy giant EDF also buying into FOGL licences earlier this year.

According to Daily Telegraph, analysts have said it is significant that Noble Energy has decided to invest in the Falklands, when the US administration has refused to endorse British sovereignty of the Falkland Islands.

Argentina which claims sovereignty over the Falklands/Malvinas has threatened to sue companies involved in oil exploration in what it considers Argentina’s continental shelf and has repeatedly notified stock markets in the US and Europe.

Ian McLelland of Edison Investment Research said that some companies have avoided entering the Falklands because of its geographical location and in particular this would affect companies with direct exposure to Latin America but potentially also those with more general investment in the Americas.

But McLelland said that the fact that a US company like Noble is entering the region is therefore of significance.

FOGL chief executive Tim Bushell pointed out that its choice of Noble had not been “politically motivated”, but added he thought any US company looking to invest anywhere new in the world would first seek advice from the US State Department.

The Daily Telegraph said that neither Noble nor the US State Department commented on the “political” issue, but Noble said that “after careful study” it believed the region was “very consistent” with its strategy

In the FOGL release Monday 6 August CEO of Noble Energy Charles D. Davidson is quoted stating that “after careful study, we believe this region is very consistent with our new ventures exploration strategy of entering regions that provide prospects that are not only material in size, but also where initial success can de-risk subsequent opportunities. In this particular case we have already identified numerous oil leads on 2D data with an un-risked gross resource potential exceeding 6 billion barrels of oil”.

The Obama administration maintains a position of “neutrality”, saying it recognizes the “de facto UK administration” but takes no position on sovereignty claims.

Top Comments

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  • Doveoverdover

    Can't speak for anyone else but it isn't so much the motivation as the effect that I'm interested in. There might have been no political motivation in choosing continental EU and US based companies (I doubt it given FIG and FIC stakeholders) but there is nothing but positive effect from doing so from the perspective of one who desires the right.

    Aug 09th, 2012 - 06:12 am 0
  • Musky

    No doubt due digilence was used to close the deal.

    Aug 09th, 2012 - 07:12 am 0
  • LEPRecon

    The motivating factor here is oil and money.

    The US uses vast amounts of petrochemicals, and lately there has been a growing feeling that they depend too much on the middle east, which isn't the most stable region on earth.

    By moving into new areas with huge potential, they will be cutting down the amount of middle eastern oil they have to rely on.

    That's why they are in the Falklands. The reason they are aligning with the Falkland Islands and not Argentina?

    Easy to answer.

    The US are still angry over the Argentines boarding their military jet without permission.
    The US companies are wary of doing 'business' with Argentina since CFK's protectionist measures means that they wouldn't make a profit.
    Argentina's proclivity for choosing friends such as Iran, Syria, Cuba, and Venezula worries the US that profits from oil could be used against US interests.

    My bet is that after the UN supervised referendum in the Falklands next year, the US will come off the fence and fully acknowledge the result. After all, the US sees itself as the champion of democracy in the world.

    I also believe that some of CFK's support will erode away from the Latin American countries, as they realise that:

    1. The Falkland Islanders have used their right of self determination.
    2. The Falklands will be a very rich place with whom they can do business, without all the protectionist measures that CFK throws up.

    Maybe by then the political landscape in Argentina will have changed. Who knows the Argentines may get a decent, incorruptible politician. But the cynical part of me doubts it.

    The poor sod who takes over from CFK will have their job cut out for them. Not only will they have to resuscitate the Argentine economy, they will have to try and rebuild Argentina's credibility as a 'serious' country on the international stage. Especially with the US and EU.

    Aug 09th, 2012 - 08:54 am 0
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