US firm signs Falklands oil deal

07 August 2012

A US-based energy firm is to join the search for oil in waters around the Falkland Islands after signing an exploration deal with Falklands Oil and Gas Limited (FOGL).

Noble Energy will invest between $180m and $230m in gaining a 35 per cent share of the exploration licences to the south and east of the Falkland Islands in a move which is being described as signalling a possible shift in America's stated neutrality over the islands' sovereignty.

The licences cover an area of some 40,000 square kilometres, and the deal follows news that Venezuelan state oil company PDVSA is in talks with YPF, now 51 per cent controlled by Argentina, over exploration in waters near the islands.

Edison Investment Research's Ian McLelland told The Daily Telegraph that some companies with "direct exposure" to, or investments in, Latin America had avoided the Falklands because of their proximity to South America and the ongoing dispute between the UK and Argentina.

"The fact that a US company like Noble is entering the region is therefore of significance," he said.

Argentina is claiming sovereignty over the islands and demanding the UK engage in talks at the United Nations, something the British government has refused to do.

This year marks the 30th anniversary of the Falklands War, when Argentina invaded the islands only to be repelled by a British task force several months later.

During the war, America was said to have adopted a neutral position, but in June it was reported that US President Ronald Reagan had cleared a US carrier to assist the UK in taking back the islands if necessary.

FOGL chief executive Tim Bushell said that the choice of an American firm had not been "politically motivated", but that Noble would have sought US State Department advice before investing in the Falklands.