Argentina: Falkland Islands Offshore Oil Exploration ‘Illegal’

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June 4, 2012

BUENOS AIRES–Argentina’s federal government has declared oil and gas exploration by five companies in the waters surrounding the disputed Falkland Islands to be “illegal.”

In five separate resolutions published Monday, the Energy Secretariat said that Desire Petroleum PLC (DES.LN), Rockhopper Exploration PLC (RKH.LN), Argos Resources Ltd. (AORGF, ARG.LN), Borders & Southern Petroleum PLC (BOR.LN), and Falkland Oil & Gas Ltd. (FOGL.LN) don’t have the permits and approvals to conduct offshore exploration in Argentine waters.

The secretariat said it has notified Argentina’s foreign ministry and the Procuracion del Tesoro, President Cristina Kirchner’s chief legal office, so they can take the necessary legal measures against the firms.

The Falklands have been under U.K. control since the 1830s, when the U.K. removed a precarious Argentine settlement from the islands.

But Argentina has long claimed sovereignty over the Falkland, South Georgia and South Sandwich islands in the South Atlantic, basing its claims on the geographical proximity and its brief possession of the islands.

Tensions between the two nations have risen since 2010, when U.K.-listed oil companies started drilling for an estimated 8.3 billion barrels of crude believed to be under the waters surrounding the Falklands.

Earlier this year, the Kirchner administration notified stock exchanges in London and New York that it would pursue administrative, civil and criminal charges against those firms.

Argentina has also threatened similar measures against the shareholders of the companies and their bankers.

It isn’t immediately clear what tangible impact if any the administrative and legal proceedings will have on the oil companies, as none are believed to have assets in Argentina.

The U.K. government has said there is no chance of negotiating the sovereignty of the Falklands with Argentina unless the islanders ask for talks.

By Ken Parks © 2012 Dow Jones & Company, Inc.

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