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Baseefa Ltd

Significant gas discovery off Falkland Islands

24 April 2012

On April 23 oil exploration company Borders & Southern Petroleum said it had discovered ‘significant’ gas condensate reserves south of the Falkland Islands, opening up a new and controversial oil and gas basin. The company said it would now conduct tests on samples of fluids recovered from the reservoir.

UK oil company Borders & Southern says it has discovered significant gas condensate reserves south of the Falkland Islands
UK oil company Borders & Southern says it has discovered significant gas condensate reserves south of the Falkland Islands

"It is too early to give an accurate resource estimate," it said, but the rock was "likely to contain significant volumes". Chief executive, Howard Obee, said: "We're delighted to have made a discovery with the company's first exploration well and to have opened up a new hydrocarbon basin.”

Oil was found to the north of the Falklands two years ago by Rockhopper, which is now seeking to develop its assets. However, this is the first discovery to the south of the disputed islands.

Borders & Southern is to drill another well before passing the rig to Falkland Oil and Gas (FOGL), which will drill at two other prospects.

Argentina has ramped up its rhetoric against British oil and gas companies in the region this year, but threats of legal action against them or their financial advisers have so far failed to disrupt the explorers' plans.

The UK Government, in a move designed to ease concern among the investment community about recent Argentine legal threats over their involvement in the Falkland Islands oil industry, has written to some 15 British and American banks and oil exploration companies operating in the region.

In the new letter, the Foreign Office says it is “deeply sceptical” that Argentina would be able to enforce “any penalties” in courts outside its own borders. It adds that the government of the Falklands “is entitled to develop” oil and fishing industries in its own waters “without interference from Argentina.”

To back up these words, the Royal Navy's newest warship has been despatched to the South Atlantic. The £1billion Type 45 destroyer HMS Dauntless's maiden mission is being construed as a show of strength, as Buenos Aires ratchets up tensions over sovereignty of the disputed territory.

All of this is against a rapidly changing political backdrop, with Argentina facing international condemnation for its seizure of Repsol’s majority stake in YPF, Argentina’s largest oil company.


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