Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Argentina Running Out Of Options Over UK Falklands Oil Fight

Politics / Crude Oil Mar 30, 2010 - 01:23 AM GMT

By: OilPrice_Com

Politics

Best Financial Markets Analysis ArticleAs Argentina's oil battle with the United Kingdom rages on, the only other obstacle the South American country can throw at oil companies planning to drill near the Falkland Islands is to interdict U.K. ships or equipment - but regional expert Riordan Roett doubts the Argentines are “stupid enough to do that.”


This would be a “very dangerous move” on the part of the Argentine government, said Roett, director of Latin American studies at Johns Hopkins University in Washington. Argentina, which went to war with the U.K. in 1982 over Falklands’ sovereignty, is “very careful” about challenging the British in reaching the islands, Roett noted.

The dispute between the old foes erupted in February when U.K.'s Desire Petroleum towed an oil rig from Scotland to the South Atlantic to drill near the Falklands.

Experts tout the area beneath the islands contains as much as 60 billion barrels of crude oil but there are many doubts about this claim.

Geologists and political-risk specialists say such a vast deposit is possible -- after all, the Atlantic Coast downward from Brazil boasts a great deal of oil – but whether the Falklands is the next place to find such resources will be a question mark for “a couple of years,” Roett said.

Oil and Latin American experts, moreover, have mixed opinions about whether U.K. oil firms actually need the Argentine government's help to siphon out any oil from the contested waters.

U.K. firms can do without Argentine infrastructure but much will depend on current technologies, Roett argued. If companies can retrieve and pour oil into super tankers, it can then be shipped back to the U.K. or wherever their clients are based “without worrying about Argentina -- unless the Argentinians were stupid enough to try to stop the tankers,” he said.

Even if commercially viable oil at current prices or natural gas is found, projects would “somehow require the use of infrastructure in Argentina” such as ports and pipelines, Daniel Kerner, a Latin America analyst at the Eurasia Group in New York, told OilPrice.com. At the very least, he said, this infrastructure would help make the project more viable, otherwise all of the needed equipment would have to be shipped in, he added.

The price of a barrel of oil when potential Falklands’ reserves are brought up in another few years will also play into how challenging exploration will be, Roett noted.

“Is it worth the investment? Are there rigs available? The South Atlantic is not a particularly hospitable place to do any kind of deep-water drilling. So we still have to find out whether or not the technology which exists is applicable to the Falklands.”

Even though Argentina is pushing for a meeting with the U.K., and the United States has encouraged such a move, Roett dismissed the chance of an exploration partnership because Kirchner's administration is “not a transparent government.”

The U.K., with an election looming, would not want to seem weak by agreeing to negotiate either, Roett added.

Yet Kerner argued that such collaboration is “possible but it’s hard.” While this kind of a relationship would certainly assist with exploration, it’s the “most that Argentina can aspire to” and success will ultimately depend on the reservoir size and value, he maintained.

In the midst of this, it’s doubtful any Latin American country will cooperate with the U.K., Kerner said.

Argentina’s President Christina Fernández de Kirchner in fact has been rallying support from her continental neighbours, and in recent days began to mend fences with Peru, a country it fell out of favor with 16 years ago.

Kirchner has done everything in her power to make it difficult for companies pursuing the potential oil windfall. Kirchner forced boats using Argentine ports or passing through the country's waters en route to the Falklands to get special permits, and introduced a United Nations resolution reprimanding the U.K. for permitting oil exploration off the islands. The president also tabled a
bill that would impose a 30-day deadline on firms to sever ties with the islands or be run out of Argentina.

The U.N. has passed several resolutions urging both sides to negotiate but the British have declined, Kerner said.

Except for Latin America, most of the countries in the world recognize the British position on the Falklands, Roett told OilPrice.com. British sovereignty over the Falklands was declared in 1833. The Argentine military “ran into Margaret Thatcher in 1982. I don't think Christina Fernández de Kirchner wants to run into the British fleet here in 2010.”

The U.K., which reportedly dispatched a nuclear submarine to the islands to safeguard oil exploration there, has “reinforced on the Falklands their military capabilities, particularly their air force,” Roett said. And the British are better prepared to dominate the air space over the islands, he added, but doubted the row will lead to actual war again.

That no significant international oil company is participating in the drilling, meanwhile, is telling, Kerner charged.

Apart from Desire Petroleum, Spain's Repsol plans to start drilling in Argentine territorial waters -- but not in the contested area -- via its Argentine operator, YPF, which is leading a consortium.

Large IOCs so far are “moving very carefully” due to the risks associated with a “very unpredictable Argentine government,” Roett said. But if Desire Petroleum demonstrates there probably is a “reasonably large deposit,” companies will descend, he said.

With the world’s oil supplies shrinking, and more oil in the hands of producers like Saudi Arabia, Iran, Venezuela and Russia, places like the Falklands become especially important, said S. Rob Sobhani, president and founder of Caspian Energy Consulting in Potomac, Maryland.

With North Sea reserves dwindling and having already peaked, Sobhani said, countries like the U.K and Argentina see these South Atlantic reserves as a possible “game changer.”

Source: http://www.oilprice.com/article-argentina-running-out-of-options-in-falklands-oil-fight.html

By Fawzia Sheikh for Oilprice.com who focus on Fossil Fuels, Alternative Energy, Metals, Crude Oil Prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

© 2010 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Patricia
30 Mar 10, 16:45
No oil

It's really a pity, isn't it?. Pirates haven't found the hidden treasure this time...

We argentines have to be very patient. It's just a matter of time for you british to get out of these free lands by your own decision. No war is needed.

No oil, no money. You don't have anything else to do here.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in