Tuesday, December 29, 2009

Argentine firm eyes Falklands oil deal

The Argentine subsidiary of Spanish oil major Repsol is set to begin exploration for oil and gas in the Falkland Islands, business representatives said.

Argentina is not the Falklands' preferred partner for expanding oil exploration and development projects because of lingering distrust after the 1982 Falklands conflict between Argentina and Britain.

However, both the Falklands government and Britain have indicated they want the islands' oil and gas resources developed at a fast pace and are open to ideas for overseas investors.

Earlier this month Falklands-based British entrepreneurs tried to woo the Chilean oil industry and government to develop a partnership between the Falklands and Chile, which is best placed geographically to provide logistics support for exploration and development. Chilean and Argentine media said the overture received a cool response in Chile, because of Chilean concerns that approaches to Falklands might offend Argentina.

YPF's announcement took industry analysts by surprise, as there has been no indication from the British side if YPF's initiative will be welcome.

YPF says it plans to explore for oil and gas in Falklands as part of a five-year program. YPF will spend about $100 million on exploration work in the South Atlantic. YPF is also expected to lead a consortium that may include Argentina's Pan American Energy and Brazil's Petrobras, MercoPress reported.

"We will invest all the resources necessary to explore the whole of the country and find out its full potential in terms of oil and natural gas reserves," YPF Chief Executive Sebastian Eskenazi said. "We're going to define the map of remaining exploration opportunities in Argentina," he said, in a reference to Argentina's continued claim on the Falklands, a British overseas territory.

British and Falklands firms have already begun work on exploring the Falklands basin for oil. Independent estimates have put the potential reserves at tens of billions of barrels of oil.

Earlier this year Britain and Argentina lodged claims to a large area of the South Atlantic seabed around the Falklands. The rival claims have raised the prospect of renewed tensions between the two countries over the control of those oil and gas reserves.

YPF surveys are designed to map out about 250 exploration blocks in Argentina that have yet to be assigned. These include offshore blocks in the South Atlantic region.

YPF's involvement in the region's exploration is likely to hasten Britain's measures for developing some of the more lucrative oil fields identified in recent scientific surveys.

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