Mapping the Dispute Over Falklands Oil

8 April 2010 (Last Updated April 8th, 2010 18:30)

The dispute over the Falkland Islands has flared up again as British companies go looking for oil in the Western Atlantic. Offshore-technology.com takes a look at what has happened so far.

Mapping the Dispute Over Falklands Oil

Argentinean writer Jorge Luis Borges once described the Falklands dispute as "a fight between two bald men over a comb" and yet it has been raging for nearly 200 years.

However, if estimates are to be believed, the Falklands could be the largest oil producer outside of Saudi Arabia, making this anything but a pointless argument.

The islands are classified as a self-governing overseas territory of the UK and all Falklanders hold British citizenry.

Many believed that after the 1982 Falklands War, in which 649 Argentine and 155 British service personnel lost their lives, the dispute over the islands would end and to a large extent is has besides a little political posturing and rhetoric.

But things have changed. Initially, when oil was discovered in 1998, it wasn't deemed commercially viable to drill, but now the price has skyrocketed and the potential of a stable supply has opened old wounds.

Here we trace the routes of the oil dispute in the Falklands over the last 15 years from initial exploration until the recent diplomatic rumblings.

1995

A joint declaration is signed between Britain and Argentina to allow exploration for oil to take place in the south-west Atlantic Ocean.

1998

"Argentinean writer Jorge Luis Borges once described the Falklands dispute as 'a fight between two bald men over a comb'."

Shell and Desire dig six wells around the Falklands in an area about half the size of Texas and declare there may be as much as 60 billion barrels of oil and nine trillion cubic feet of natural gas. Falklands Oil and Gas Limited (FOGL) gives a much more conservative estimate of eight billion barrels of oil.

Commercial drilling does not start as oil prices hover around $10 a barrel, making it unviable to extract.

April 2009

Argentina officially lays claim to 1.7 million square kilometres of ocean surrounding the islands in a formal appeal to the UN.

March 2009

UK Prime Minister Gordon Brown meets with Argentine President Cristina Fernandez de Kirchner ahead of the G20 conference in London but refuses to discuss sovereignty with her saying the British Government's long-term position of claimed sovereignty is clear.

November 2009

North Sea oil and gas exploration rig the Ocean Guardian sets off from Cromarty Firth, Scotland, to the Falklands. The rig will explore four of the wells in shallow water around the island.

December 2009

Argentina passes a law claiming ownership of the Falklands and several other British overseas territories including South Georgia and the Sandwich Islands.

18 January 2010

The UK rejects Argentina's latest claims over the islands.

12 February 2010

Argentina blocks a cargo ship under the impression it was "illegitimately" searching for oil and gas and was supplying drilling equipment to British oil companies in the Falklands.

16 February 2010

Kirchner signs a decree saying all vessels travelling between Argentina and the Falklands, or those travelling through Argentine waters en-route to the islands, must seek prior permission.

"If estimates are to be believed, the Falklands could be the largest oil producer outside of Saudi Arabia."

17 February 2010

Desire petroleum says a 9,000t rig, being towed from Scotland, will start drilling off the Falklands in the next seven days.

18 February 2010

Brown issues a warning to Argentina by putting Royal Navy warships on standby leading to more speculation in the press over a second Falklands War.

19 February 2010

The Ocean Guardian arrives in the Falklands as the Legislative Assembly on the islands says drilling will go ahead claiming the Argentine response was "no surprise".

Meanwhile, Argentina threatens to extend the restrictions to all ships entering South American waters heading to the islands.

20 February 2010

Argentine Deputy Foreign Minister Victorio Taccetti claims it is in the UK's interests to open a dialogue with Argentina over oil supplies in the Falklands.

22 February 2010

Exploratory drilling officially begins for oil in an area 100km north of the islands in an area called Liz. Geologists estimate a 17% chance of finding an oil reserve of 391 million barrels. It will take 30 days for the drill to reach its target depth of 3,500m.

24 February 2010

At a summit in Mexico 32 Latin American and Caribbean countries back Argentina over the Falklands situation.

25 February 2010

Spanish company Repsol announces it will begin drilling between 150-200 miles west of the Ocean Guardian. It claims it will explore a few wells "within Argentinean waters". The US gets involved in the dispute and refuses to endorse British sovereignty over the islands.

26 February 2010

US Secretary of State Hillary Clinton announces she will meet with President Kirchner on 1 March at the inauguration of Uruguay's President Elect José Mujica.

1 March 2010

Clinton meets with Kirchner in the Argentine Capital Buenos Aires but they do not discuss the Falklands situation. Clinton does, however, offer herself as a mediator in talks between the Argentina and Britain. Back on the islands, FOGL says it is ready to fund its share of the drilling costs.

2 March 2010

Downing Street openly rejects the US's offer of help saying it did not think its direct involvement is necessary.

RAB sells its shares in FOGL to drill the fields to the south of the islands. Its joint venture partner BHP Billiton is looking for a deep-water rig required to explore the field. BHP claims it should not be too much of a problem to bring a larger rig in from the Gulf of Mexico or West Africa.

3 March 2010

On her way back to the US, following a five-day tour of Latin America, Clinton makes a last-minute stop in Argentina to meet again with Kirchner. She encourages both countries to resume talks after Kirchner agrees to let her mediate.

A fourth British company, Boarders and Southern Limited, announces plans to drill to the south of the islands are underway.

9 March 2010

In the UK Labour deputy leader Harriet Harmon says the Falklands will be "fully defended".

17 March 2010

The UK's HMS Sceptre, an attack submarine, is deployed around the Falkland Islands.

18 March 2010

Argentinean Falklands War veterans threaten to invade the islands again, according to The Daily Mail, although this was widely reported in the South American press as untrue, and calls for a boycott of all British products.

23 March 2010

Argentina takes its claim over the islands to the Organization for American States.

29 March 2010

Desire Petroleum announces drilling oil of the Falklands may not be economically viable. Initial results from the well suggest there are only small quantities of low quality oil. As its share price tumble, Desire points out it may just be a case of drilling deeper and reminds shareholders it is the first of six possible wells.