Argentina to stock markets: Falklands oil illegal
Argentina has asked stock markets in New York and London to warn investors of its claim that five oil exploration companies are working illegally off the Falkland Islands, which Argentina contends were stolen by Britain more than a century ago.
Foreign Minister Hector Timerman announced Thursday that he had sent letters to the directors of both markets urging them to force any company involved in oil exploration near the islands to warn investors that the companies risk civil and criminal penalties in Argentina, which considers the "Islas Malvinas" to be part of its sovereign territory.
The companies are Argos Resources Ltd., Desire Petroleum PLC, Falkland Oil and Gas Ltd., Borders & Southern Petroleum PLC and Rockhopper Exploration PLC. Islanders and Britons involved in the Falklands oil business say they have proven they can develop oil no matter what Argentina says or does. "It's like baying at the moon. The claim isn't recognized by the people of the Falklands or the people of Britain.
Investors are aware that Argentina is making noise, but it's really just noise," said John Foster, managing director of Britain's Falkland Islands Holdings PLC, which owns a minority share of Falkland Oil and Gas Ltd. "As a practical matter I don't think it will have any impact."
Rockhopper struck oil north of the islands last year, finding in its Sea Lion field what may be as much as 450 billion gallons of petroleum, and is looking for $2 billion in investment money to begin producing crude. Analysts have said that over its lifetime the field could deliver $10.5 billion in taxes and royalties to the Falkland Island government.
This year, Borders and Southern and Falkland Oil and Gas are drilling exploratory wells south and east of the islands, investing $1.3 million a day in hopes of a major discovery. All five companies are small players in the oil industry and would need major partners to shift into production. The Argentine government has sought to keep that from happening or at least make it more expensive by barring any participating companies from doing business in Argentina and now by trying to cast doubt on the legality of the exploration.
With Argentina's warning letters, "the stock markets will be able to evaluate if they should continue handling the companies' shares, and can demand that the companies inform the markets so that current and future investors are properly informed of the legal risks" of continuing to operate on Argentina's continental shelf, Timerman said. A spokesman for the New York Stock Exchange, Rich Adamonis, confirmed the exchange received the letter and said it had no immediate comment.
Argentina has asserted its sovereignty over the islands ever since they came firmly under British control in 1833. The two countries fought a war in 1982 that killed more than 900 people, and with April 2 marking the 30th anniversary of an Argentine military incursion, both countries have engaged in an escalating war of words over their future. The Falkland Islands are no longer the distant and declining British colony that Argentina occupied a generation ago. They are a self-governing British overseas territory, and as such their population of 3,000 will determine what happens with the oil, said Stephen Luxton, the mineral resources director for the Falkland Islands government. "Oil provides the basis for securing our long-term future," Luxton said.