Economy of The Falkland Islands - Energy and Minerals

Energy and Minerals

Four sedimentary basins that could potentially contain hydrocarbons have been identified in the Falkland Island waters. They are:

• North Falkland Basin which is located to the north of the islands.
• Falklands Plateau Basin which is located to the east of the East Falkland.
• South Falklands Basin which lies to the south-east of the islands and extends up to the Falklands Trough.
• Malvinas Basin which lies to the south-west of West Falkland, between that island and Tierra del Fuego at the head of the Falklands Trough. Part of this basin lies in Argentine waters.

The latter three basins are part of a larger contiguous formation.

An agreement with Argentina had set the terms for exploitation of offshore resources including large oil reserves as it was thought that there might be up to 60 billion barrels (9.5 km3) of oil under the sea bed surrounding the islands. However, in 2007 Argentina unilaterally withdrew from the agreement. In response, Falkland Oil and Gas has signed an agreement with BHP Billiton to investigate the potential exploitation of oil reserves. Climatic conditions of the southern seas mean that exploitation will be a difficult task, though economically viable, and the continuing sovereignty dispute with Argentina is hampering progress.

Recent (2012) exploration results have indicated that taxation on oil revenues, even though they will be amongst the lowest in the world, are expected to more than double the country's revenue.