Argentina Sues British Companies over Falklands Development

By INDALECIO ALVAREZ | AFP | JUNE 5, 2012

Argentina declared British oil exploration off the Falklands “illegal” on Monday and immediately set about suing five companies for pursuing activities around the contested islands.

Britain responded almost immediately, saying the islanders were entitled to develop their own natural resources and it was Buenos Aires that was breaking the law with its campaign of harassment and intimidation.

“These latest attempts to damage the economic livelihoods of the Falkland Islands people regrettably reflect a pattern of behavior by the Argentine government,” a Foreign Office spokeswoman said.

“From harassing Falklands shipping to threatening the islanders’ air links with Chile, Argentina’s efforts to intimidate the Falklands are illegal, unbecoming and wholly counter-productive.”

Argentina last month pressed Britain in a diplomatic note to let it launch direct flights to the islands.

Three decades after the Falklands War, the promise of oil reserves is inflaming tensions between Britain and Argentina while also boosting the economic hopes of the islanders — estimated to number just 3,140.

Britain has ruled the archipelago — 8,000 miles (12,900 kilometers) from its own shores and less than 300 miles off the southern coast of Argentina — since 1833 as a self-governing overseas territory.

Argentina says it acquired the windswept islands, which it calls the Malvinas, from Spain in 1816.

On April 2, 1982, Argentine forces invaded and occupied the Falkland Islands and South Georgia, a smaller island governed by Britain further out in the South Atlantic.

Britain dispatched a naval task force and regained control of the islands when the Argentine forces surrendered on June 14, but not before 649 Argentine and 255 British servicemen had died.

The renewed war of words over the Falklands has intensified around the 30th anniversary of the bloody 74-day conflict.

Argentine President Cristina Kirchner on Monday declared the British oil hunting activity “illegal and clandestine” and accused the firms of operating “in the sovereign area of the argentine nation.”

Her government said the classification formally paved the way for criminal proceedings to begin.

“The declaration of clandestineness clears the way for the immediate launch of civil and criminal action against these businesses,” said a foreign ministry statement that spoke of seeking fines and penalties.

It said the Argentine government would soon be in communication with Britain’s Treasury, its Financial Services Authority, the International Organization of Securities Commissions (IOSCO) and the New York Stock Exchange.

Argentina first announced in March that it intended to take legal action against the British oil concerns but it has never made clear how it intends to go about it or where it intends to file suit.

The companies — Desire Petroleum, Falkland Oil and Gas, Rockhopper Exploration, Borders and Southern Petroleum and Argos Resources — “are not authorized by the Argentine government under law,” read a resolution published Monday in Argentina’s Official Bulletin by Energy Secretary Daniel Cameron.

The islands’ oil reserves, which have remained untapped until now but which analysts predict could be worth tens of billions of dollars, have been a major source of tension between the countries since their discovery in 1998.

At the time, a barrel of crude sold for less than $10 — today it would fetch $125 — and firms led by Anglo-Dutch energy giant Shell abandoned their exploration on the grounds it was not profitable enough.

The rocketing price of oil since then has enticed the five companies back to the islands, hoping to cash in on what might be one of the world’s last new sources of fossil fuels.

To Argentina’s dismay, drilling resumed in 2010 with Rockhopper and Desire Petroleum taking the lead.

Three small companies followed suit, but until now only Rockhopper — named after one of the Falklands’ resident penguin breeds — has confirmed significant reserves, in the Sea Lion field to the north of the islands.

Rockhopper plans to start developing the field this year, and expects to pump the first of its estimated 450 million barrels in 2016, according to analysts Edison Investment Research (EIR).