Treasure islands?

THE promise of offshore-oil riches has dangled over the Falklands Islands for years. Seismic data go back as far as the 1950s; exploratory wells were drilled in 1998. With just 2,563 residents, a multibillion-dollar oil industry would make the Falklands one of the richest communities on earth. The local Falkland Islands Government (FIG) has already crafted its own fiscal policy to collect a 9% royalty on petroleum that is eventually extracted and a 26% corporation tax on future licensees. The FIG is planning to channel revenues into a sovereign-wealth fund, modelled on Norway’s.

All this potential wealth sharpens antagonism between Britain and Argentina, which also claims sovereignty over the islands that it calls the Malvinas. Daniel Filmus, a one-time Argentine senator who recently became head of a new “Malvinas Secretariat”, has warned firms drilling off the islands’ coasts that they will be ineligible to exploit shale-oil and gas in Patagonia’s vast Vaca Muerte field. In November the Argentine congress passed a law to impose hefty fines and prison sentences of up to 15 years on anyone involved in exploring the Falklands’ continental shelf without its permission.

The supermajors with an eye on Argentina, such as Chevron and BP, are not expected to pursue work in the Falklands in the foreseeable future. That leaves the field clear for...Continue reading



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