OT 436: Letter to the Chair of the Committee from the Falkland Islands Government

 

I wanted to write to give you an update on the Falkland Islands Government's position on oil

exploration in Falkland Islands waters given Argentina's recent Decree imposing restrictions over shipping in their territorial waters in an attempt to hamper this exploration, Their actions have, naturally, led to a great deal of media speculation regarding our, as well as the UK's, relations with the Government in Buenos Aires.

 

The Falkland Islands Government is well accustomed to threats from Argentina. The British

Government, which is responsible for our foreign policy, has reaffirmed British sovereignty over the Islands on numerous occasions.

 

How Argentina choose to legislate for shipping in their territorial waters is entirely a matter for them. Similarly, legislation relating to activities in Falkland Islands territorial waters is a matter for the Falkland Islands Government.

 

The current behaviour of the Argentine authorities will not have any impact on the exploration drilling due to commence in the coming weeks. Legislation for the drilling is in place, The Ocean Guardian oil rig is on location. All of the attendant equipment required for the drilling operation is in place in the Falkland Islands and we fully expect, weather permitting, for drilling to commence on schedule.

 

Media speculation regarding the British military presence in the Islands is a matter for the Ministry of Defence; however, we are content that our defence levels are appropriate.

 

I enclose a briefing to give you some further information regarding the current hydrocarbon exploration in Falkland Islands waters as well as the current situation.

 

19 February 2010

 

 

Briefing Note on Oil Exploration in Falkland Islands Waters

 

Background

 

One of the primary goals of the Falkland Islands Government is to achieve a sustainable economic future for the Islands. Encouraging hydrocarbons exploration remains an important element of that goal and is a part of our overall plan to diversify the economy so that it is less reliant on the fishery, which is susceptible to large fluctuations in profitability due to variable catch rates. The Argentine Government's refusal to cooperate on sustainable fishing issues has done nothing to improve this situation.

 

We have granted licences for drilling in Falkland Islands waters since 1998, when a drilling programme in the North Falkland Basin comprised six exploration wells. No commercial discovery was made but a small amount of oil was recovered by the rig and some gas was found to be present in two of the wells. These encouraging indicators have led companies to continue to invest in exploration in the area.

 

Current Operations

 

Currently there are twelve licences for exploration in the North Falkland Basin, situated approximately 200 kilometres north of the Islands, and eighteen licences to the South and East. The licensed areas cover some 88,400 square kilometres.

 

Five companies (and their partners) have been awarded licences: Argos Resources, BHP Billiton (Falklands Oil and Gas Limited), Borders and Southern Petroleum, Desire Petroleum (Arcadia Petroleum) and Rockhopper Exploration.

 

We anticipate that the drilling phase will last between six and eight months.

 

The operators drilling wells in the 2010 drilling phase have been required to gain comprehensive approval taking into consideration environmental, health and safety and technical issues. The Falkland Islands Government is encouraged by the investment being made to establish whether there are commercial quantities of hydrocarbons in the Falklands. However, any potential revenues from exploitation will not feature in the Islands' economic planning unless, and until, commercially viable reserves are discovered.

 

In his New Year's message to the Islands, the Prime Minister, Gordon Brown, reinforced our view. He said: ''The British Government will continue to support the development of your hydrocarbons sector. But there is of course no guarantee that commercially viable reserves will be found. And, should there be any, extraction will be some years away. You are right therefore not to factor any revenues into your economic planning. But the opportunities - and the risks - make careful preparations vital for this important work. The British Government will continue to work with you on this agenda."

 

Relations with Argentina

 

In September 1995 the British and Argentine Governments signed a joint declaration agreeing to cooperate with offshore exploration in border areas which were delineated. Both sides agreed that exploration would not prejudice either side's claims to sovereignty.

In March 2007 the Argentine Government repudiated the 1995 declaration - part of a process of Argentine withdrawal from practical co-operation with the Islands.

 

The Falkland Islands Government totally refutes Argentine claims to sovereignty over the waters in question, as does the British Government. These are Falkland Islands territorial waters. The British and Falkland Islands Governments have no doubts as to the sovereignty of the Islands.

 

The prospect of future oil revenues does nothing to change the sovereignty of the Islands and neither strengthens nor legitimises the Argentine claim.