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Oil and troubled waters

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« on: February 17, 2010, 01:36:27 pm »

Oil and troubled waters

Feb 17th 2010 | BUENOS AIRES | From The Economist print edition

Plans to drill for oil in the Falklands provoke angry words from Argentina



EACH year a well-rehearsed performance takes place at the United Nations Special Committee on Decolonisation. Argentina’s government protests that Britain’s sovereignty over the islands it calls the Malvinas is a colonial injustice, and that the principle of territorial integrity demands that they be reunited with the mainland. Representatives from the Falkland Islands counter that they have a right to self-determination; that they have no wish to be part of Argentina; and that they do not consider themselves to be a colony of Britain anyway. Most of the time the argument gets no further than that. After going to war over the islands in 1982, Britain and Argentina have enjoyed diplomatic relations for 20 years now. But the arrival of an oil exploration rig in the Falklands this month will give new fuel to dispute that dates back to 1833.

On February 16th Aníbal Fernández, the presidential chief of staff, announced that ships sailing between Argentina and the Falklands would henceforth require a permit. Earlier the government barred a ship which it said had previously called in the islands from loading a cargo of pipes. (Techint, the Argentine manufacturer of the pipes, said they were destined for the Mediterranean.) Cristina Fernández de Kirchner, Argentina’s president, said she would “work unceasingly for our rights in the Malvinas, for human rights.” A spokesman for the British embassy in Buenos Aires said that the application of laws in and around the Falklands was a matter for the islanders, and that Britain had no doubts over the sovereignty issue.



Exploratory wells were drilled in the waters of the Falklands in 1998. While suggesting there might be oil, further exploration was not seen as profitable at the low price then prevailing. Subsequent seismic surveys and the surge in the price of oil prompted Desire Petroleum, a small British company, to hire the rig, which will drill up to ten wells for it and Rockhopper, another British outfit. Most will be in the north Falklands basin, with perhaps one or two in the south Falklands basin, which has not yet been explored at all. By the end of this year the 2,500 islanders will have a better idea of whether the Falklands are to become the Saudi Arabia with penguins.

If recoverable oil is found, it will be doubly galling for Argentina. Since the war, income per head in the once-poor islands has substantially overhauled that in the would-be motherland. While the Falklands have grown rich on squid (and more), Argentina’s long decline has continued. Because Ms Fernández’s government, like that of her husband and predecessor, Néstor Kirchner, is unfriendly to foreign oil companies, its own oil and gas industry is steadily shrinking.

Ms Fernández is deeply unpopular, thanks to rising inflation and evidence that the first couple have grown rich while in office. But her outrage over the Malvinas plays well at home, even if few Argentines believe that it will achieve much. When Mr Kirchner suspended charter flights to the islands and banned Argentine scientists from taking part in a binational commission on fishing, he was applauded for this. With a presidential election next year, the only thing that will pour oil on the dispute is if the wells prove to be dry.
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