Potential for major Falklands oil find infuriates Argentina

 

WHEN STEPHEN Luxton was nine years old, Argentina’s military finally caught up with his father.

Arriving shortly after the Argentinian invasion of the Falkland Islands on April 2nd, 1982, was a Major Patricio Dowling, who liked to boast to the islanders of his Irish ancestry and support for the IRA.

Fresh from his role in his country’s dirty war, the major arrived with a list of potential troublemakers. Luxton’s father, one of the most vociferous anti-Argentinians among the Falklanders, was near the top.

After a game of cat and mouse across the islands, Major Dowling’s men finally caught up with the Luxtons at the family’s farm and bundled them onto a helicopter.

“We have unpleasant memories of flying across Falklands Sound (a sea strait) with the door of the helicopter open. I did not appreciate the significance of it at the age of nine. But I know now what they used to do to people who they didn’t like, which was throw them out of helicopters over water. But my parents were certainly very afraid at that point,” remembers Luxton.

Instead of joining the long list of those “disappeared” by Argentina’s military dictatorship, the family was flown into exile – the only Falkland Islands family to be expelled during Argentina’s 74-day occupation.

After a British task force retook the islands they were able to return, and today Luxton is busy working to secure the long-term future of the Falklands.

As director of the islands’ department of mineral resources he is in charge of the government’s efforts to try to realise the promise held out by geologists that the waters around the south Atlantic archipelago could hold billions of barrels of oil.

If the top estimates are realised, the Falkland Islanders could be catapulted from the list of high-income countries into the company of the super-rich, its 3,000 residents rivalling Russian oligarchs and Arab sheikhs for wealth.

One exploration firm has already discovered 450 million barrels of oil in the Sea Lion field to the north of the islands. London-listed Rockhopper is now seeking €1.5 billion in investment to bring it into production. If it succeeds, the Falklands could be entitled to up to €8 billion in taxes and royalties over the field’s lifetime, according to industry analysts – a huge sum for a community whose gross domestic product is about €125 million.

This year will also see wells drilled in the inhospitable deep waters to the south of the islands targeting potentially far bigger finds than Sea Lion.

Falklands Oil Gas Ltd, one of the companies drilling in the south basin, says it is targeting an area that may hold up to 5 billion barrels. “The Falklanders could be the richest people in the world,” says company director David Hudd.

But the Falklanders themselves are cautious, in part because the oil firms estimate the chances of an “elephant find” at no more than 25 per cent. “There is huge upside potential, but we will continue to spend what we have got, not what we might have in 10 years’ time. The important word here is potential,” says Luxton.

Such is the islanders’ caution, bred by decades of economic frugality, that a recent economic development strategy drawn up by the Falklands government barely mentioned oil, lest it fail to materialise.

THE ISLANDERSare beginning to debate what the impact of major offshore finds could mean for their community.

Some are worried an oil boom would irrevocably change life on the Falklands. In a small community with little crime and where people still greet each other by name when passing in the street, many become nervous at talk of the population jumping past 10,000 people in coming decades. But supporting an oil industry would require the sort of investment likely to attract new arrivals.

Other Falklanders see oil as the potential to secure the future.

“We need to grow the economy, and the more wealth we have as a nation the less we will need to rely on South America,” says Dick Sawle, the Falklands’ assembly member in charge of development.

“I am not an isolationist. I want to trade with South America. But I want to have the luxurious option of being able to say, ‘we don’t want an air link to Buenos Aires, thank you very much, we’ll do our own to where we want to go’.”

One means of using any oil wealth to secure the future would be to start contributing towards defending the islands. London spends about €75 million a year on warding off any renewed attempt by Argentina to retake the islands by force. “A popular view would be that we should contribute towards that. We feel a debt of gratitude to Britain for liberating us,” notes Luxton.

But the potential of an oil boom in the Falkland Islands has infuriated the Buenos Aires government, which despite Argentina’s defeat in 1982 has not relinquished its claims over the Falkland Islands, which it calls Las Malvinas.

Last week, Argentina’s foreign minister, Hector Timerman, warned his government would

try to sue any companies which participate in the Falklands’ oil rush – which it considers an imperialist grab against Argentinian mineral wealth.

“We will defend the resources of the south Atlantic, which are the property of all Argentinians,” he said.

This latest threat follows last year’s decision by BHP Billiton to quit Falklands waters. It is widely understood in the region that it did so lest Argentina should move against its mining interests in the country.

But oilmen already in the Falklands are sanguine. “There are hundreds of companies with no interests in Argentina who would be happy to come here,” says Hudd of Falklands Oil Gas Ltd. “This could be another North Sea – and we could be here for another 20 years.”


Tomorrow: how memories of the Falklands conflict haunt both sides 30 years on