Argentina launches legal action against UK oil groups in the Falklands

Argentina launched a lawsuit against British companies exploring for oil and gas in disputed waters around the Falklands Islands on Friday, as diplomatic sparring intensified ahead of elections in both countries this year.

Argentina raised the threat of extradition and imprisonment for company executives involved in what it describes as illegal drilling.

Diplomatic tensions between the UK and Argentina have mounted over the past month after London announced it would reinforce its military defence of the islands, followed by accusations that the UK has spied on Argentina.

Daniel Filmus, secretary of state for the Malvinas, the name by which the islands are know in Argentina, said on Friday that legal action had been launched against five companies backing a six-well drilling campaign licensed by the Falkland Islands' government.

Charges have been laid with a judge against London-listed Premier Oil, Rockhopper Exploration Falkland Oil and Gas, along with Noble Energy and Edison International of the US, of illegal exploration on Argentina's continental shelf.

Mr Filmus said charges laid under recently passed laws could see offenders sentenced for up to 10 years for unlawful exploration, and one year if convicted of unlawful extraction.

The threat of arrest on Argentine soil that existed under previous laws has already led executives of companies involved in previous rounds of drilling in the disputed waters to avoid travel to the country.

Mr Filmus said, however, that the judge would have the right to summon executives and, if they refused, could pursue them beyond Argentina in countries that had extradition treaties with Buenos Aires.

"Argentina will use all laws that are available, national and international, to make sure that the resources of 40m citizens of Argentina are not taken away from them," Mr Filmus said.

The minister and Alicia Amalia Castro, the country's ambassador to the UK, also criticised remarks by Michael Fallon, UK defence secretary, who last month described the Argentine threat to the Falklands as "a very live" one.

Mr Fallon also said that attempts to impose an embargo on oil exploration around the islands had been generally successful. "None of the big companies are out there," he said.

The three UK companies subject to criminal proceedings declined to comment on the charges, and whether they had yet received any communication from Argentine authorities on the matter.

A source close to one company, however, dismissed the suggestion that the threats would have any impact on plans to develop fields or further exploratory drilling. "It's business as usual," he said.

Ian Hansen, chairman of the Falklands Legislative Assembly, criticised statements by the Argentine minister.

"The Falkland Islands' government fails to see how drilling is in any way a provocation," Mr Hansen said. "We have the right to develop our economy, including the hydrocarbons industry, and we are exercising that right."

Mr Hansen also attacked suggestions from of an unwarranted militarisation of the Falkland Islands, which Argentina unsuccessfully invaded in 1982 and led to a conflict in which more than 600 Argentine and 255 British servicemen were killed. "UK forces are here as a deterrent and levels of personnel over the past 10 to 15 years have reduced considerably," he said.

Oil was first discovered around the Falklands in 2010 by Rockhopper, in a field named Sea Lion that is located north of the islands where Premier Oil is now field operator.

The final investment go-ahead for Sea Lion's development has yet to be received. Any firm commitment could see the first stage of the field's development delivering 60,000 barrels of crude a day by the end of the decade.

The Falklands' government could feasibly receive $2.5bn in oil-related tax over 15 years, with further discoveries offering the potential to turn the Falkland Islands' population of nearly 3,000 into dollar millionaires.

Mr Filmus said if a negotiated solution were reached over sovereignty, the islands' population had the option of remaining British citizens under Argentine administration, while still profiting from any oil revenues as a future province of the state.

"The inhabitants have everything to gain, including oil, if negotiations start," he said.

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