There is a good deal of oil in the Falkland Islands. The British Government has been very supportive of the exploration needed to discover this. The next step is to get the oil online. Can that step be taken?
In the great Sea Lion Field, there are roughly 2.7 billion extractable barrels. The main firm involved is Navitas Petroleum, an Israeli company. Rockhopper Exploration, a British company based in Salisbury, has a 35 percent stake. [emphasis, links added]
There is, however, a political problem with a financial consequence. Argentina, which claims the Falklands as its territory, always objects to any economic development there. As a result, banks will not lend the $900 million (£715 million) required on normal banking terms.
The Falkland Islands government therefore wants to issue bonds to finance the project. For that, it needs a partial British government guarantee.
In October, HM Treasury refused this. In doing so, it did not use the normal Foreign Office-style argument about the danger of inflaming Argentine opinion (though one imagines this thought will be lurking somewhere in the British official mind).
The problem, it said, is climate change commitments.
As part of the COP26 Agreement reached in Glasgow in 2021, Britain agreed not to give direct support to the development of hydrocarbons “for the international unabated fossil fuel energy sector”.
That decision, if applied to our overseas territories, amounts to an act of unilateral energy disarmament by the UK, at a time when, partly because of the war in Ukraine, we need energy rearmament.
In the Falklands lies a substantial amount of oil, probably enough, eventually, to more than halve Britain’s net daily imports from foreign countries.
It is oil from a friendly source on which Britain could, if need be, rely. If the Treasury sticks by its decision, we will continue to be over-reliant on oil from bad places.
Britain suffers from the fact that, unlike many countries, it does not have its own strategic oil reserves. The Sea Lion field could help remedy that.
Navitas also argues that the carbon effect of its work will prove neutral because it will undertake a regeneration program for the islands’ famed peatlands.
In July, Rishi Sunak said that issuing new oil and gas licenses for the North Sea was “entirely consistent” with the Government’s net zero plan.
It is not obvious why the same argument should not apply to the Falkland Islands, which are surely, as the Government says in other contexts, “family” rather than “international”.
Besides, Britain always insists that it will defend the right of the Falklanders to develop the islands for their economic benefit.
On Sunday, Javier Milei was inaugurated as the new President of Argentina, writing “Viva la Libertad” (“Long live Liberty”) in the registration book. “The only way out of poverty is with more freedom,” he declared.
He is aligning his country away from China and Russia and toward Western attitudes. His arrival could be propitious. He wants to “bury decades of failure.”
Argentina’s most spectacular failure of modern times was its military invasion of the Falkland Islands in 1982. He has shown no sign of wanting to reenter that territory.
It cannot be beyond the wit of Britain to back Falklands oil, for our own good and that of our loyal overseas territory.
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The UN is the biggest enemy in the whole world it was never created for Peace its time to totally defund the United Nations by 100%
Maybe befriend Argentina and (just to keep the peace) grant them a small percentage of the oil produced minus a contribution to development costs. There must be sources of financial support, other than British banks.