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IBRU: Centre for Borders Research

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Potential drilling off the Falkland Islands provokes tension between Argentina and the UK

(17 February 2010)

South Atlantic maritime jurisdiction map

On 15 February, Falkland Oil & Gas agreed to lease the Ocean Guardian rig from the company Desire Petroleum in order to start a drilling exploration wells on the Toroa prospects located in the East Falkland basin. Originally, UK-based Desire Petroleum has leased the Ocean Guardian in 2009 with plans to drill two wells within its license area of the East Falklands basin in a venture with the mining giant BHP Billiton. The semi-submersable rig left its berth in Scotland in November and is due to arrive in the Falklands on 18 February after a lengthy trip costing some $27 million. After completing its wells for Desire, the rig will later be leased to other companies with oil exploration licenses off the Falklands, including Falklands Oil & Gas and the Australia firm Grasshopper.

The last round of drilling on the Falklands continental shelf was in 1998 when Royal Dutch Shell made oil and gas discoveries in five out of six wells. At the time, the price of oil had fallen dramatically, making the cost of exploration in the remote and turbulent waters around the Falklands not economically viable. With the price of oil now significantly higher, the estimates of commercially exploitable deposits in the Falklands basin are becoming difficult for oil companies to ignore. Nevertheless, any operations in the Falklands area are bound to be controversial as Argentina considers the islands – Las Malvinas – as part of its sovereign territory and this recent activity has led to deteriorating diplomatic relations between Argentine and the United Kingdom.

These recent drilling and exploration plans are considered illegitimate by the Argentinean government which accuses the United Kingdom of violating Argentine sovereign rights. In 2009, both Argentina and the United Kingdom submitted claims to continental shelf areas beyond the normal 200 nautical mile exclusive economic zone around the Falkland, South Georgia and South Sandwich Islands to the UN Commission on the Limits of the Continental Shelf (CLCS). These fairly similar claims included large areas of overlap, although Argentina also claimed continental shelf areas beyond 200 nautical miles from its claimed territory in Antarctica, located in the Weddell Sea east of the Antarctic peninsula. Given the existing sovereignty dispute the CLCS will not make recommendations on either claim.<br><br>On 2 February, Argentina’s foreign minister Jorge Taiana officially protested the drilling plans with the British embassy in Buenos Aires but the tension has developed through other channels. In the days preceding the signature of the agreement between Falkland Oil and gas and Desire Petroleum, Argentine authorities detained the Thor Leader, a British-flagged vessel belonging to a Danish shipping company, in the Argentine port of Campana on the grounds that it was transporting Argentine-made steel pipes to be used for drilling wells in Falklands waters. Although the manufacturer of the pipes, Techint Groups of Argentina, claimed they were destined for Egypt. On 15 February, the Argentine government also decreed that all ships transiting from Argentina to the Falkland Islands would be required to obtain a special permit. In addition, Argentina has threatened to put sanctions on any firm taking part in the exploration and drilling operations within what it believes to be Argentinean continental shelf.

Argentina’s foreign minister has also threatened to take legal action against the United Kingdom for violation of sovereign rights, possibly to the United Nations directly or to the International Court of Justice (ICJ). Any approach to the ICJ will most likely take the form of a request for provisional measures whereby Argentina would ask the Court to rule that there are significant international legal questions involved requiring the immediate suspension of drilling operations. Argentina undertook a similar approach with neighbouring Uruguay in the recent dispute concerning the construction of wood pulp mills along the Uruguay River that forms their boundary. Provisional measures can be requested from the ICJ unilaterally, whereas a case for judgment requires the consent of both parties. Given the long history and political complexity of the situation, is unlikely in the near future that both Argentina and the United Kingdom would consent to have the ICJ adjudge sovereignty over the Falklands Islands.

Unless anything changes, drilling activities are scheduled to start before the end of February 2010. The United Kingdom does keep a small number of air, naval and ground forces stationed on the Falklands for defence, but the risk of another military confrontation between Argentina and the United Kingdom is highly unlikely. Instead, Argentina appears to be pursuing diplomatic, legal and commercial avenues in voicing its objection to the drilling activity.

View maps of the claims of Argentina and the UK to maritime jurisdiction in the South Atlantic and Southern Oceans.

Sources: ‘Argentina set on rattling Falklands firms’ UPI Energy Resources, 15 February 2010; ‘UK’s Falkland Oil and Gas leases rig, to drill first well H1 2010’ Platts Commodity News, 15 February 2010; ‘Falkland Oil and Gas to drill in disputed South Atlantic waters’ The Independent, 15 February 2010; ‘Argentina not preventing Falklands offshore exploration’ Business News Americas, 12 February 2010; ‘Argentina considering legal action against UK over Falklands’ Platts Commodity News, 12 February 2010; ‘Falklands oil prospects raise Argentina-Britain tensions’ Agence France Press, 12 February 2010; ‘Falklands oil plan angers Argentina’ Financial Times, 3 February 2010.