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Britain Condemns Argentina’s Claim of Sovereignty

Argentina and Great Britain are at odds, and offshore hydrocarbon development is getting swept up in the disagreement.

On Saturday, an Argentinian federal judge ordered the seizure of the equipment and bank accounts of five oil and gas companies operating in the Falkland Islands, located about 435 miles off the coast of Argentina. Argentine Foreign Minisiter Hector Timerman said the action is intended to show the country’s sovereignty – a claim sharply dismissed by Great Britain.

On Monday, June 29, Foreign Office Minister Hugo Swire of Great Britain issued a statement condemning the decision. “This politically motivated decision to target company assets is a wholly unacceptable attempt to exercise extra-territorial jurisdiction, and has no legal justification whatsoever,” said the release. “This action, aimed at British and international oil and gas companies, has dangerous implications for global business. The government of Argentina should refrain from unjustified provocations of this kind.”

The five companies involved in Falkland Island operations include Edison Intl. (ticker: EIX), Falkland Oil & Gas (ticker: FOGL), Noble Energy (ticker: NBL), Premier Oil (ticker: PMO) and Rockhopper Exploration (ticker: RKH). All companies declined comment when contacted by Reuters. Noble Energy is the only one with headquarters in the United States. The company acquired a 75% interest and operatorship in a 285,000 gross acre block in April 2015, and was scheduled to commence drilling on its initial prospect in May.

Argentina-Great Britain Relations

Argentina’s election period is approaching, leading some to question if leaders of the South American country are using the move as a political play to garner positive attention.

Virtually the entire population of the Falkland Islands voted to remain a British colony in a 2013 election, a claim which was dismissed by Argentina’s President as “trickery” and a “publicity stunt.” Another Argentine Senator said the Falklanders were illegally living in an area that is Argentine sovereign soil, claiming there was no legal framework.

The countries engaged in a 74-day war in 1982 when Argentine forces invaded the territories and were subsequently engaged by the British. More than 900 lives were lost before Argentina surrendered. The outcome of the war has clearly not stopped Argentina from affirming the Falklands are still their territory, even though it has remained a part of the British crown since 1841. The Falklands are actually referred to as Argentine property in the country’s constitution.

The latest developments may also be an extension of recent hydrocarbon activity in Argentina, which has accelerated in recent years. It has the second greatest demand of any country in South America and a newly reformed energy sector offers reduced export tariffs, increased tax incentives and more licensing rounds to encourage international investment. The Energy Information Administration says Argentina is one of only four countries worldwide currently conducting operations from shale.

Shale

Statement from Foreign Office Minister Hugo Swire

"In the last few days we have seen the latest example of the Argentine authorities’ flagrant and unacceptable campaign to strangle the Falkland Islands hydrocarbons industry.

"We have been absolutely clear that Argentine domestic law does not apply in the Falkland Islands, nor in the waters that surround them. This politically motivated decision to target company assets is a wholly unacceptable attempt to exercise extra-territorial jurisdiction, and has no legal justification whatsoever.

"This action, aimed at British and international oil and gas companies, has dangerous implications for global business. The government of Argentina should refrain from unjustified provocations of this kind.

"The Falkland Islands’ plans to develop their hydrocarbons industry, with the support and expertise of companies from around the world, is a legitimate commercial venture. The Falkland Islanders have every right to decide their own future, including through the development of their economy. As ever, we stand behind them and are confident that the international community will continue to resist these Argentine threats."  


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