Time to tune in to the latest episode in the tumultuous history of the Falklands Islands, with oil once again the main theme.
The pre-season opener featured Argentinian players celebrating the 2-1 victory over England in the semi-final of this year’s FIFA World Cup unfolding a banner (apparently handed to them by a fan in the crowd) reading ‘Las Malvinas son Argentinas’ — translated as ‘The Falklands are Argentine’ — for TV viewers across the globe to see. This flagrant violation of the FIFA code of conduct on inappropriate messaging at a sporting event resulted in a hefty fine for the Argentine Football Association, player suspensions and other sanctions.
The incident served to highlight the resentment in Argentina, whipped up from time to time by the country’s presidents, over Britain’s claim to the Falkland Islands. The dispute has festered in some form since the early 1800s, culminating in a brief armed conflict in 1982, when a British expeditionary force famously repelled an Argentinian invasion, cheered on by Prime Minister Margaret Thatcher, who was grateful for a fortuitous opportunity to bolster the waning popularity of her government, which duly got re-elected the following year.
'President Trump has helped to stir things up.'
In a different context, President Trump has helped to stir things up. Earlier this year he shared that he was reviewing the traditional neutral stance that the US has adopted over the disputed territory. During the Falklands War, the US did help British forces, not with actual troops but with extensive intelligence, some equipment and logistical support. Trump, albeit vaguely, cast some doubt on whether the US would do the same today. He was upset that Britain failed to sufficiently support the bombing campaign against Iran and also expressed doubt about its military capacity to defend the Falklands.
Trump’s remarks emboldened Argentine President Javier Milei, a right-wing ally, to proclaim US support for his country’s position, a timely cross-party rallying cry ahead of an election year in 2027. Coincidentally, the Falkland Islands offshore oil aspirations upped the anti.
'The oil saga kicked off in 1996.'
The oil saga kicked off in 1996 when the first licences were granted offshore by the Falkland Islands government. This was a huge provocation for Argentina. Worse was to follow in 2010. That was when the persistence of UK company Rockhopper Exploration paid off. Using the Ocean Guardian semi-submersible, the company discovered the Sea Lion oil field, 220 km north of the islands in around 450 m water depth. Initial recoverable reserves have been estimated at 314 to 319 million barrels (valuable medium-grade crude), with 2C reserves of 500 million barrels and regional potential in the North Falkland basin of 1.7 billion barrels. If developed, the impact of the potential revenue for the Falklands community of around 3000 people would be astonishing. Even today the island economy has already become quite prosperous as traditional revenue, essentially from sheep farming, has transitioned into lucrative fishing licensing and tourism, amounting to GDP per capita of £85,060.
This was all too much for the then Argentine President Cristina Fernández de Kirchner. She dubbed the British as ‘robbers’, passing laws that would sentence any oil executives supporting exploration in the Falkland Islands to 15 years in prison. In fact, possible commercial development stalled for a decade or so because of the unfavourable investment environment for such a remote project, particularly in the shadow of geopolitical tension. That changed in late 2021 when Israeli company Navitas Petroleum acquired a 65% stake and operatorship of the Sea Lion project with Rockhopper retaining 35%.
Argentinian rhetoric exploded when Navitas declared it had the go-ahead to develop the Sea Lions oil field in the North Falkland basin. First oil is to be produced in 2028 via a floating production, storage, and offloading (FPSO) vessel at an initial rate of 50,000 barrels a day.
An enraged President Milei launched a criminal complaint against the companies involved in the so-called illegal exploration and exploitation of the northern Malvinas Basin. Shareholders would be targeted along with ‘all directors, managers, trustees, members of the supervisory board, administrators, agents and representatives … and anyone else who may have been involved in the punishable act.'
The irony of this show of anger is that it is directed at an enterprise largely owned by Israelis. Argentina (with a significant Jewish population) has long cultivated good relations with Israel, admittedly with some anti-semitic periods in the past. So, when Britain recently imposed sanctions on illegal Israeli settlements in the occupied West Bank, Israeli National Security Minister Itamar Ben-Gvir publicly called on the Israeli government to recognise Argentine sovereignty over the Falkland Islands.
For the record, a reasonably unbiased history goes something like this. The islands were uninhabited when discovered by Europeans. France established a colony on the islands in 1764. In 1765, a British captain claimed the islands for Britain and left a marker to this effect. In early 1770 a Spanish commander arrived from Argentina with five ships and 1400 soldiers, forcing the British to leave Port Egmont. Britain and Spain almost went to war over the islands, but the British government decided to withdraw its presence from many overseas settlements in 1774. Spain, which had a garrison at Puerto Soledad on East Falklands, administered the garrison from Montevideo until 1811. It was then compelled to withdraw under pressure of the Peninsular War during the Napoleonic era in Europe. In 1833, the British returned to the Falkland Islands and have remained since.
In essence, Argentina says the Falklands belong to it citing the Spanish colonial era before Argentina actually became a country. Britain says it got there first and today argues that Falkland Islanders have the right to self-determination, citing a 2013 referendum in which 98% of the population voted to remain a self-governing British Overseas Territory. New Prime Minister Andy Burnham has pledged unwavering support.
Long term, in a volatile geopolitical world, the Falklands Islands and especially the offshore oil developments remain in play.
Long term, in a volatile geopolitical world, the Falklands Islands and especially the offshore oil developments remain in play. In 1965, the UN called upon the two sides to find a peaceful resolution in the context of decolonisation and the wishes of the Falklands community. Argentina maintains this is an endorsement of its position. In the late 1960s, as Britain was relinquishing assets of the old empire, the Labour government made a little publicised attempt to persuade the islanders to consider some accommodation with Argentina. One plan was a leaseback arrangement similar to Britain’s release of Hong Kong. That didn’t fly, and so the saga continues.
Views expressed in Crosstalk are solely those of the author, Andrew McBarnet, EAGE Editor Emeritus. He can be contacted at andrew@andrewmcbarnet.com.
