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OIL COLUMN – Argentina warns Falkland oil explorers

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Argentina has warned that a fresh phase of oil drilling in the waters surrounding the Falklands (Malvinas) could escalate the dispute over the islands’ sovereignty.

Argentina views the exploration activity as illegal and unauthorised. 

The comments come within days of Premier Oil and a cohort of explorers announced a rig deal which could see as many as 21 new wells drilled in the South Atlantic, starting next year.

Hector Timerman, the Argentine foreign minister, in a statement, said: “this unauthorised and arbitrary exploitation is in contravention of international law as it contravenes a previous UN resolution that urges both parties to refrain from taking any unilateral measures that could exacerbate the dispute.”

The British government supports the exploration of the Falklands, and it considers it to be a legitimate business.

On Wednesday it was announced that as twenty-two new wells will be drilled in the Falklands in an upcoming exploration campaign, starting early next year.

Premier Oil (LON:PMO) is expected to kick-off the programme with an exploration well testing the Zebedee prospect, alongside partners Rockhopper (LON:RKH) and Falkland Oil & Gas (LON:FOGL).

The FTSE 250 oil driller is then expected to move the rig on to the Isobel/Elaine prospect, also partnered with Rockhopper, before handing the vessel over to Noble Energy (NYSE:NBL) which plans to drill two wells.

Noble’s prospects, unlike the other ‘firm’ wells in the campaign, are located in the South Falkland basin. 

The American oil company recently shot 12,000 square kilometres of 3D seismic and it expects to select its preferred well locations later this year. FOGL will partner Noble in these wells, as agreed in a farm-out deal in 2012.

The rig then returns to Premier for two more ‘firm’ wells, testing the Jayne East and Chatham (or Sea Lion West) prospects. Both Rockhopper and FOGL will participate in these wells too.

Beyond that, there are a total of sixteen additional drilling options – eight of which can be exercised before the rig is mobilised and eight can be exercised at “key points” during the drill campaign.

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