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The prize of oil

By John Lea - posted Tuesday, 29 April 2008

The Argentine Navy’s oceanographic vessel “Puerto Deseado” has been commissioned to collect scientific and technical data on the seabed to the north of the Falklands and all the way to South Georgia. Information gathered from the survey would be used in Argentina’s presentation before the United Nations to have its continental platform border and rights extended from 200 to 350 miles. [It is] reported that the Falkland Islands Acting Governor General Paul Martinez confirmed that neither the Falklands nor the UK government had been informed of the intentions of the “Puerto Deseado”, nor had the Argentines made any official request to operate within Falkland Islands or South Georgia waters. (South Georgia Newsletter, March 2008).

The news that Australia has won approval from the UN to expand its territorial limits out to 350 miles (The Australian, April 21, 2008) may not raise much international controversy but the same cannot be said for what is happening in the Falkland Islands.

Claim and counterclaim by Britain and Argentina are currently underway in the South Atlantic. Are we likely to see another confrontation?


It became clear to me while on a recent visit to Argentina, the Falkland Islands and South Georgia early in 2008 that very few Argentinians accept that their defeat in the war of 1982 was conclusive. The Falklands War was a strange and expensive affair with many observers concluding that it had more to do with the domestic politics of both combatant countries than it had with the islands themselves.

Besides the collective loss on both sides of almost 1,000 men, the war was said to have cost the British taxpayer some £3.8 billion by the time the government stopped counting in 1986 (The Times, London, April 2, 2007). Present defence costs incurred by the British armed services are of the order of £100 million a year. Indeed, the Argentine poet and essayist Jorge Luis Borges (1899-1986) likened the whole affair to two bald men fighting over a comb. It has been calculated that the nearly 3,000 islanders are outnumbered 200 to one by sheep and 330 to one by penguins.

However it would unwise to rule out a further contest in this remote yet historically troubled part of the South Atlantic. In both World Wars the islands were closely associated with major naval engagements between Britain and Germany and now, in the 21st century, the search for strategic oil reserves has focused world attention on the region again. This time Australia too has become indirectly involved in the future development of the islands.

In October 2007 the Anglo-Australian global natural resources giant BHP Billiton purchased a stake in oil exploration licenses over the southern Falklands area from Falkland Oil and gas Ltd for US$10 million and agreed to drill between two and four wells at a cost of some US$100 million (The Times, October 3, 2007).

This southern oil basin could contain some 10 billion barrels involving drilling in water 600-1,400 metres deep with each well costing up to US$50 million. Ten years ago several companies discovered oil in the northern Falklands basin, a different geological structure, estimating huge potential reserves of 60 billion barrels (The Financial Times, October 18, 2007). But that discovery was not considered profitable enough to exploit given the price of oil at the time plus the costs of deep sea extraction in the southern ocean. Today, both the introduction of new technology and high oil prices have turned the economics of the venture around.

Coincidentally, the UN Commission on the Limits of the Continental Shelf (UNCLS) has announced that under international law a country’s territory can extend up to 350 miles from its coast (currently 200 miles) if it can prove that it is a part of the underlying continental shelf (The Sunday Times, September 23, 2007). Such claims and applications must be made by May 2009.


Accordingly, Britain has announced it will probably apply for an extension to its Falkland Islands and South Georgia territories of 350 miles from their shorelines and Argentina is expected to do likewise. However, as the Argentine mainland is only 300 miles (487km) distant, the likelihood of overlapping claims will add fuel to the present sovereignty dispute much to the annoyance of the Argentine government whose president at the time (Nestor Kirchner) said at the UN that “… if the British do not change their approach we shall have to interpret it as aggression” (Sunday Telegraph, September 23, 2007).

The technical evidence required by the UNCLS is substantial, involving extensive submarine soundings to establish the position of the continental shelf. Indeed, press reports state that Australia has submitted 80 volumes of evidence to the UN in support of its own territorial seabed claims (The Guardian, September 22, 2007).

UN law states that nations may register their rights by “establishing the foot of the continental slope, by meeting the requirements stated for the thickness of sedimentary rocks”. Hence the planned voyage by the Argentinian oceanographic vessel Puerto Deseado near Falkland and South Georgia waters referred to at the beginning of this article.

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About the Author

Dr John Lea, who visited the Falkland Islands and South Georgia in February 2008, is an Hon associate professor in the Faculty of Architecture, Design and Planning at the University of Sydney. He is the author of several books on the development of island states in the Pacific and has acted as consultant to the World Bank, UN agencies and AusAID.

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