Monday, 21 March 2011

Rockhopper makes find in disputed Falklands territory

Falkland Islands oil map, source: AFP (02/2010)

British oil explorer Rockhopper Exploration has proven its Sea Lion discovery off of the UK-governed Falkland Islands to be commercially viable with an appraisal well, the first such result in the disputed territory.

Company Chief Executive Sam Moody gave the following comment on the Rockhopper website, “Following this positive result we believe Sea Lion is highly likely to prove commercially viable… We can now continue to appraise the Sea Lion discovery and to explore additional prospectively within our acreage with added confidence.”

The northern Falklands basin, in which Rockhopper's Sea Lion discovery was made has been long thought to be highly prospective, and this find is likely raise hopes that this British-governed territory will become a new oil province.

Rockhopper said its 14/10-4 Sea Lion appraisal well had been successful and that it would continue to appraise the discovery and explore additional prospectivity within its acreage.

Other companies have drilled on the island, with Desire Petroleum failing to find oil off the islands in November last year. Despite this, Desire saw their shares rise 16 per cent today, while Argos Resources, who also holds blocks in the northern Falklands basin got a 12.5 per cent boost.

Oil exploration activity around the Falklands has sparked protests from Argentina, which claims sovereignty over the islands, which it calls the Malvinas and which lie 300 miles from its shore, according to Reuters.

Argentina has long claimed the islands. It invaded the Falklands in 1982, sparking a short war with the UK, which ended with Britain maintaining control of the territory.

The BBC in February 2010 reported a war of words heating up between Argentina and the UK over the foreign oil exploration campaigns.

Then UK defence minister Bill Rammell, speaking to the House of Commons, said the government had a 'legitimate right' to build an oil industry in its waters. He also said that the government would take 'whatever steps necessary' to protest the islands, and that it had made Argentina 'aware of that'.

Argentina reportedly threatened to take 'adequate measures' to stop British oil exploration in contested waters around the islands, and sought support from its Latin American neighbours.

Venezuela's President Huge Chavez was reported by the BBC as having said Britain was being irrational and had to realise the 'time for empires was over'. Nicaragua's President Daniel Ortega also called for Britain to return the Malvinas to Argentina.

That said, Argentina has ruled out military action, and has tried, in recent years, to pressure the UK into negotiations on sovereignty. How both sides will react to the new reality of Falklands oil is yet to be seen.

Sources: Upstream, Reuters, BBC, Rockhopper

For more information, see the Menas Borders website, here.

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