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Falklands oil quest draws U.S. investor Anadarko

Jan. 24, 2012 at 4:28 PM   |   Comments

STANLEY, Falkland Islands, Jan. 24 (UPI) -- The Falkland Islands' search for oil in challenging offshore conditions in the South Atlantic is drawing interest from U.S. investors, giving the islanders hope a potential deal could offer some insurance against Argentine claims on the British overseas territory.

Reports of talks on a possible takeover or majority acquisition in Rockhopper Exploration Plc by Anadarko Petroleum Corp., one of the world's largest independent oil and gas exploration and production companies, already have benefited shareholders in the company as its stock surged on London markets.

Rockhopper is the only one of about half a dozen oil companies to have found oil after extensive and deep drilling in the Falklands waters.

The islands' oil exploration has become increasingly contentious as Argentina pursues its claim of sovereignty over the islands. Military-ruled Argentina invaded the islands in 1982 but was repulsed by British forces in a 74-day conflict that caused the deaths of about 1,000 troops and civilians.

In later years of civilian rule, Argentina revived its territorial claim and since 2009 has intensified its bid with an international campaign.

The Falklanders sat they feel encouraged by U.S. investor interest in the oil exploration. Funding of Rockhopper's expensive exploration program faced difficulties in present European economic climate. Anadarko's involvement could lead to a deal that will meet Rockhopper's urgent need for about $2 billion in further exploration costs.

The Falklanders' optimism is fueled by the expressed logic that U.S. corporate investment in the oil exploration program will introduce an international dimension and implied U.S. interest.

The islanders are aware that U.S. corporate investment doesn't equate with U.S. political or strategic interests in the area but they remain optimistic that such a large investment will generate interest in Washington.

Driven to distraction by Argentina's frequent verbal attacks on Britain and the Falklanders' legitimacy as an overseas British territory, the local government sees a U.S. entry of any kind as a positive happening.

A U.S. State Department comment last week backed self-determination for Falklands. Argentina interpreted the comment as a vindication of its diplomacy but the Falklanders see self-determination as their ultimate strength. The islands are inhabited mostly by people of British origin for whom self-determination means staying within a British sphere of influence.

State Department spokeswoman Victoria Nuland said the Falklands were "a bilateral issue that needs to be worked out directly between the governments of Argentina and the United Kingdom. We encourage both parties to resolve their differences through dialogue in normal diplomatic channels.

"We recognize de facto United Kingdom administration of the islands but take no position regarding sovereignty," Nuland said.

Rockhopper hopes to start producing oil by 2016. If a deal with Anadarko goes through as widely speculated, Rockhopper will still be looking for another $400 million. Several other Texan oil firms, including Noble Energy Inc., Hess Corp and Murphy Oil USA Inc. are interested, as are British oil firms Cairn Energy and Premier, the London Sunday Times newspaper reported.

Anadarko was a minority owner in BP's Macondo well, which killed 11 oil workers and spilled almost five million barrels of oil into the Gulf of Mexico in 2010. Anadarko agreed last year to pay BP $4 billion to settle claims over the disaster.

Anadarko has headquarters in The Woodlands, Texas, and employs about 4,700 people worldwide.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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