Argentina urges oil firms to stop oil & gas activities in the Falklands

Argentina has urged oil companies to stop activities related to offshore oil and gas exploration and production in the disputed areas near the Falkland Islands.

Bartolomej Tomić

In a statement issued last week, the Argentine foreign ministry said three oil companies – Rockhopper, Premier Oil, and Argos Resources – were carrying out oil and gas activities on the continental shelf near the Falkland Islands – without the authorization of the Argentine government.

Argentina and the UK in 1982 fought a brief but deadly  – around 1000 dead – war after the Argentine forces invaded and occupied the Falkland Islands. The war lasted between April 2 and June 14, 1982, with the UK eventually seizing back the control.

While Argentina has claimed sovereignty over the Falkland Islands, the Islanders in 2013 voted to remain British overseas territory, with 1,513 in favor, and just three votes were against (BBC).

In its statement last week, the Argentine foreign ministry said the Falkland Islands, South Georgia, the South Sandwich Islands, and the surrounding maritime areas were “an integral part of the Argentine national territory“ and are „subject to dispute between our country and the UK.”

Argentina said that the oil and gas exploration and production activities being carried out offshore the Falkland Islands constituted “unilateral acts contrary to international law.“

“Therefore, the Argentine Government urges aforementioned companies and other entities to refrain from financing or participating in such activities…,” the Argentine foreign ministry said.

The ministry was responding to recent company updates issued by Premier and Rockhopper, the two companies with a share in the Sea Lion oil field development offshore the Falkland Islands.

The companies are working towards making a final investment decision for the project that would require $1.8 billion investment to first oil. Rockhopper in September said the project sanction could be expected “within the next 12 months (subject to securing funding).”

Sea Lion Phase 1 will develop 250 mmbbls (gross) resources in, using a conventional FPSO based scheme. The first oil is expected around 3.5 years after sanction, with the first phase plateau production expected to reach ~85 thousand barrels of oil per day.

The project is operated by Premier Oil which owns a 60 percent stake, while Rockhopper owns a remaining 40 percent stake. Premier has recently started a formal farm-down process for its part of ownership, saying it wanted to “optimize its level of participation in the project.”

Argos’ acreage

Argos Resources – the third company mentioned by the Argentine foreign ministry – holds a 100% interest in Licence PL001. The license covers approximately 1,126 square kilometers in the North Falkland Basin. Its boundary is located 3 kilometers from the Sea Lion oil field.

Argos was reassigned a 100 percent ownership over the block in February 2019, following a decision by Edison and Noble Energy in 2018 to relinquish their stakes in the offshore license.

The two companies had farmed into the license back in April 2015, with Noble Energy taking 75 percent and Edison taking the remaining 25 percent. Argos was to retain an overriding royalty interest of 5% of gross revenues from all hydrocarbon discoveries developed within the license. Also, under the terms of the farm-in agreement, Argos had been receiving quarterly cash payments totaling £300,000 per year.

Argos in September said it continued to receive quarterly cash payments from Noble and Edison of £75,000 per quarter, for a period of 450 days after the notice to withdraw, until December 27, 2019.

The current second phase of the license expires in November 2019 and Argos is in talks with the Falkland Islands Government over the potential extension. The company has also said it will seek to secure other partners to participate in the development of its PL001 license.

Offshore Energy Today has reached to the government of the Falkland Islands, as well as to the three oil companies mentioned, seeking comment on the statement by the Argentine foreign ministry. Rockhopper declined to comment. We will update the article if we receive any other response.

Offshore Energy Today Staff