29 September 2007

Falkland Island Oil

This Guardian article (via L&P) talks about national claims to mineral rights beyond territorial waters -- in particular the UK's claims around the Falkland Islands and Rockall.

My immediate response was to the claim in the article:

the value of the oil under the sea in the region [of the Falkland Islands] is understood to be immense: seismic tests suggest there could be up to 60m barrels under the ocean floor.

60 million barrels.

At $80/barrel, that is worth a bit under 5 billion dollars, or 2.5 billion pounds -- less than a third of the cost of the 2012 Olympics, and probably much less than the cost of setting up extraction infrastructure.

Either The Guardian has lost a lot of zeros, or the oil in the region is utterly insignificant.

Luckily, I didn't get where I am today by believing everything the Guardian told me. Looking at Wikipedia, it appears the Guardian is confusing millions and billions.


It is considered probable that more than 60 billion petroleum barrels (10 km³) have been generated in the North Falkland Basin

(I also learned that 60 million barrels is about two weeks' current production from the North Sea.)

Things to consider:

  • There is believed to be significant oil near the Falklands.
  • The Guardian doesn't know millions from billions.
  • Liberty and Power can't see at a glance that 60 million barrels of oil is nothing, despite the fact that the price of a barrel of oil is hardly an obscure piece of knowledge these days.
  • I was going to go on about much-maligned Wikipedia being more reliable than the Guardian, but between drafting and posting this, the Guardian has (a) corrected the error and (b) left a note explaining the correction. Perhaps I should say that Wikipedia is more reliable than today's Guardian, in that today's Guardian has had little time to be fixed. However, if the fact in question is actually new (as opposed to background, like the 6 million barrels), which is at least suggested by insisting on today's paper, then we all know Wikipedia is unreliable too. So scrub that one. Full marks to the Guardian for the promptness and manner of the correction.

In the long term, we cannot hold onto valuable mineral reserves in the South Atlantic. Defending them is justifiable, but probably not practical.

The time to negotiate is now. (Well, I've been saying this for 10+ years, so the best time has passed, but there is still an opportunity). We want:
  • A revenue-sharing agreement for mineral rights for 50 years.
  • Rights of the inhabitants guaranteed for 50 years.
  • A Northern Ireland style arrangement with oversight by the South American partner.
  • Sovereignty to devolve to the South American partner after the 50 years, Hong Kong style.
Argentina is the obvious partner for such a deal, but not the only possible one. Chile is, I believe, the closest mainland. Venezuela has the oil production infrastructure. And if none of them offer anything decent, hey, maybe the US would like a naval base or something. Let the bidding commence.


cabalamat said...

In the long term, we cannot hold onto valuable mineral reserves in the South Atlantic. Defending them is justifiable, but probably not practical.

How is it not practical? Britain has, and is likely to continue to have, a larger economy than Argentina. Furthermore defending them would become even easier of the EU becomes a defence alliance or NATO extends its coverage worldwide.

Tom Gunton said...

Its nothing to do with the Falklands or oil, if there was enough oil they would already be extracting it. The Falklands are on the Antarctic continental shelf so who lays claim to them also does to a large proportion of Antarctica and it's weirdness. Go learn.