Argentina Threatens Court Action

15 Dec

Report from Reuters today concerning the potential of the oil finds near the Falkland Islands, which are considered significant by the standards of fields like the North Sea though small fry when compared to the 50 billion barrels thought to lie offshore Brazil.

The terms are appealing, however, and the companies have seen their valuations rocket, “What mitigates the cost is the fiscal terms, they’re about as good as anywhere in the world,” London-based Oriel Securities analyst Richard Rose said.

However, there will be some reaction from neighbour Argentina which continues with its questionable claim to the archipelago and which is already attempting to blockade the fledgling oil industry there. “If there is a big find, I imagine the companies will be sued. There would very likely be legislation in the international courts. We’re going to do our best to curtail the financing of the companies and make their lives difficult,” Fernando Petrella, a former Argentine ambassador and deputy foreign minister, told Reuters.

All of which will raise the costs of extraction. Rockhopper Exploration, which has struck oil on four occasions now, believes it can build production facilities without access to South American ports utilising a floating vessel to store oil before periodically offloading it onto shuttle tankers.

It has said it needs $2 billion to build the project but has not yet said where the money will come from, and is in need of a larger partner. Who? is the question.


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