British territory consults with islanders about plans to drill 500m barrels for oil
First time in history the Falkland Islands have opened their waters to oil exploration, which could lead to an economic boom.
The ruling council of the territory has asked the islanders whether they support the plan to extract 500m barrels from the Sea Lion oil field, located 150 miles north.
Navitas Petroleum is an Israeli company that has acquired the majority of rights in the field. This means the vast majority of profits will go to its Israeli and US shareholders.
The islanders, however, could potentially benefit from millions in taxes and royalties levied on profits. This would transform the entire economy of the islands, which is currently based on sheep farming.
It is estimated that the field contains 1.7bn oil barrels, which makes it several times larger than Rosebank – the largest planned development for the UK North Sea. Rosebank was estimated to hold around 300m barrels.
However, the plans could be embarrassing to the UK. The amount of crude oil produced would be a major blow to the UK’s commitments on reducing emissions.
Labour, who is expected to form the next Government based on the current polling results, has made the acceleration of the net zero transformation a major part of their pitch to voters. Sir Keir’s Starmer party has pledged to ban any new oil and natural gas exploration in British water.
This ban will not apply to the Falklands as the local administration has the final say on drilling rights in the surrounding waters.
The Falkland Island Gazette, a government-issued publication, published the details of the program without fanfare. Dr Andrea Clausen is the director of natural resource for the Falkland islands government.
It said that “a statutory consultation period will run from 26 June 2024 until 5 August 2024… about Navitas proposals for drilling oil wells and offshore extraction from the Sea Lion Field,”
Navitas released an environmental impact report at the same time that said the development of Sea Lion required drilling in 1,500 feet in the South Atlantic, a region renowned for having some of the wildest oceans in the world.
Project would initially drill 23 wells for up to 500m barrels, but there could be much more oil to come.
Oil from Sea Lion will be processed and stored on a floating storage vessel, with tankers transporting the oil to global markets for sale. Falklands oil will not reach the UK in large quantities.
Many in the Falklands Government have wanted the islands to be a centre of oil production.
John Birmingham, deputy portfolio-holder for natural resource, MLA (Members of the Legislative Assembly), stated: “Offshore oil and gas has the potential to become a significant component of our economy in the coming decades.
“At the time, we acknowledge that environmental impacts must carefully be managed and that it is important that the unique Falkland Island environment is protected.
We welcome the submission of an environmental impact statement to allow the public to express their opinions on the issue.
The Falklands is an archipelago located in the South Atlantic, off Argentina. It consists of two large islands, East Falkland & West Falkland plus over 800 smaller islands.
The Falkland Islands are an overseas territory of the UK. They govern themselves, but the UK is responsible for their defense and foreign affairs. Stanley is the capital of East Falkland.
Since 1833, Britain has been ruling them. In 1982 Argentina invaded and fought a short war which Argentina lost. Most of the 4,000 residents are British citizens, and their main sources of income include sheep, fishing, and tourism.
The oil was discovered in 1998, but the next critical step to bring the oil into production has not been taken.
Navitas holds 65pc of working interest in Sea Lion. Rockhopper Energy of the UK, which discovered the Sea Lion field in 2010, controls all the remaining shares.
Navitas plans to hold several public engagement sessions on the island during the consultation period from now until August.
The Falklands Islands Government said in a statement: “We have a right to use our own natural resources.” The Falkland Island government operates its own system of petroleum licensing. This includes exploration, appraisal, and production activities related offshore hydrocarbon resources.
If approval is granted, Falkland Islanders would be entitled to royalties from oil production, tax revenues directly related to the project, and increased economic activity.
The UK would receive priority for the contracts. “An economic assessment estimated that this development would add approximately £750m in value to UK firms, and 1,375 jobs, during the construction phase.”
Uplift, a group of environmentalists that campaign to phase out gas and oil, has said such a development would undermine UK efforts to meet UN commitments to reduce emissions.
The statement said that the UK was already behind schedule in meeting its Nationally Determined Contribution.
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