The British government and various multi-national stakeholders expect to – with increasing effect – extract Falkland Islands-originated crude oil and natural gas in 2017. This will cushion their abrupt energy revenue decline as a result of the depletion of certain first world reserves and the elevated production costs in the North Sea.
The Falkland Islands’ role beyond ethical sovereignty debates and thus frequently implied geo-political militarization of the South Atlantic’s alleged non-militarized “neutral zone”, once again, comes to cross-industry attention.
In 2012, US-based oil company, Anadarko, paid U$S1.5 billion to the British government to participate in exploration for hydrocarbons on the Falkland Islands submarine platform.
According to The Sun, four Anadarko executives flew to Puerto Argentino where they held meetings with representatives of British explorer Rockhopper. Rockhopper claims to have discovered a reservoir with a minimum estimated 700 million barrels of crude oil in an exploration zone north of the Sea Lion Islands.
“Six energy companies have approached Rockhopper, which wants to get a partner to start developing its Sea Lion discovery and pump millions of barrels to the surface,” the company said in a statement. “US involvement could be a hammer blow to Argentina, a great achievement for ex-UK Prime Minister David Cameron’s proposed policies and a change in the lives of 3,000 (British-originated, Falkland) islanders,” he added.
Meanwhile, the Bahamas-flagged Leiv Eiriksson platform, which was contracted by two British companies – Borders Southern Plc and Falkland Oil and Gas Ltd. – began to explore operations in two wells located on the South Archipelago.
“We Took the Lottery”
The British oil company Rockhopper drew global attention by communicating in 2010 that in the north of the Falkland Islands, within the area of 200 miles claimed by Great Britain, they had found an oil field, creatively named “Sea Lion”, which estimated at approximately 242 million of barrels. At a price of U$S80 a barrel, the deposit has a current value of $20 billion.
“We took the lottery,” Sam Moody, a co-owner of Rockhopper, announced, calling the region “a new oil province.”
In the international press, figures of up to 60,000 million barrels circulate throughout the 200-mile area around the Falklands. But are they realistic figures? The German daily Deutsche Welle consulted with the independent German Energy Watch Group (EWG) and its experts relativize the figures that are handled.
“Around 60 billion barrels have already been found (and largely exploited) throughout the North Sea (British and Norwegian areas),” EWG affirmed, “As it is the largest oil area found in the last 50 years, it is presumed that estimates for the islands’ environment are exaggerated. Surely the company wants to raise the price of its shares, which inspires it to spread fantasy figures. ”
In general, stock market expectations about the oil finds in the Falklands are significant. Rockhopper is not the only one involved in the business.
Other companies currently holding operating licenses include Argos Resources, Falkland Oil & Gas (FOGL), Desire Petroleum and Borders & Southern. However, not all are good news for them. FOGL published a statement on its website as early as July 2011 announcing that the Toroa exploration east of the Falklands did not work.
“We drilled to a depth of 2,476 meters, but we did not find hydrocarbons,” the statement ascertained.
Limboing Exploitation and Virginity
According to Energy Watch Group, “The islands have the same risks and difficulties as in the Gulf of Mexico, since they are deep sea drilling.”
In addition, it is often forgotten that the extraction of oil is also bound in normal conditions to a constant environmental contamination, for example as a result of oil losses, the use of chemicals and the generation of radioactive waste in the perforations.
“In the South Atlantic region, exploration and exploitation costs are disproportionately high. That is, that the oil has not been exploited before is by a combination of factors. But now…it’s worth it.”
Therefore, despite the diplomatic pressure of the allies of the South American region, it appears increasingly more likely for – for instance – the UK to negotiate with Argentina, not on the question of sovereignty, but any proposal that tends to modify the current status of the archipelago of the Falkland Islands as an even bigger-picture business venture than typical mass media portrayal.