Offshore oil a 'game-changer' for Falkland Islands - San Francisco Chronicle

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Offshore oil a 'game-changer' for Falkland Islands - San Francisco Chronicle Mar 16th 2012, 12:12 (03-16) 03:15 PDT STANLEY, Falkland Islands (AP) -- Falkland Islanders are so accustomed to making do with what they've got that many still heat their homes with peat stoves, grow their own vegetables, repair their Land Rovers themselves and raise chickens for their soft-boiled eggs. But now they've struck oil offshore — potentially vast stores of it. Billions of dollars in taxes and royalties could soon flow their way, creating an entirely unfamiliar challenge: the prospect of sudden and tremendous wealth. If the first strike alone can attract the major investment needed to start producing crude, this closely knit community of 3,000 people mostly descended from sheep farmers, soldiers and sailors could find themselves richer than sheiks. They'll rival the bankers of Liechtenstein and Lamborghini drivers of Qatar as the wealthiest people in the world. Far from celebrating the millions of dollars that oil exploration is already pumping into their treasury, however, most islanders seem far more concerned about the troubles that rapid change might bring. They like their way of life just like it is: tranquil, surrounded by nature and nearly crime-free. "The important word here is 'potential' — bolded and underlined several times. I'm potentially a lottery winner," said Stephen Luxton, the government's mineral resources director. "Don't get me wrong: everybody's excited about it, but we're not going to spend money we don't have." The reluctance comes from experience. Daunting political, technical, financial and environmental questions have kept the oil from flowing for years. For one thing, Argentina still claims the "Islas Malvinas" despite nearly 180 years of British control and a failed occupation 30 years ago. President Cristina Fernandez is trying to use diplomatic and economic power to force Britain into sovereignty talks ahead of the April 2 anniversary of the 1982 invasion. Her Foreign Minister Hector Timerman said Thursday that Argentina will pursue "administrative, civil and criminal" penalties against the islands'"illegal" oil industry. With neighbors like these, islanders hope Big Oil money will enable them to fund their own defense and gain leverage in global trade. "Oil means security for us. If we go back to being sheep farmers again, would the U.K.government stick up for us as much? I'd like to think so, but maybe not," said Dan Fowler, a biologist born during the 1982 Argentine occupation. Most islanders were tenant farmers who struggled to make a living on wool during their first 150 years as Britain's colonial subjects. But now they are a self-governing British Overseas Territory, deciding for themselves how to tax and spend. And they will surpass Arab oil barons in per-capita wealth if they get even a fraction of the $10.5 billion in taxes and royalties some industry analysts predict will flow from the Sea Lion field, discovered north of the islands last year by Rockhopper Exploration PLC. While Rockhopper seeks a $2 billion partner to move toward producing the crude, Borders & Southern Petroleum and Falkland Oil and Gas Ltd. are drilling two exploratory wells each this year in much deeper water south of the islands. It's high-risk, high-reward, costing them $1.3 million a day with less than a 25 percent chance of success. But a big strike could prompt a rush to join what might be one of the world's last new sources of fossil fuels in an era of peak oil. The southern basin could hold ten times more than the Sea Lion field's estimated 450 million barrels, with a potential payoff soaring above $100 billion, according to Edison Investment Research, a London-based financial analysis firm that published an optimistic "Falkland oils" report last month. "It's a game-changer for the Falklands," said John Foster, a British board member of the Falkland Islands Company, the islands' largest private employer and a minority shareholder in Falkland Oil and Gas. The money could go a long way in the rocky, wind-swept islands, where just a few gravel roads connect remote settlements to Stanley, the only town. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers. Five Filters recommends: Donate to Wikileaks.

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