Sunday 19 February 2012

Oil & Gas in the Falklands

Everyone will have noticed the increased tensions between the United Kingdom and Argentina recently in relation to the Falkland Islands (Islas Malvinas). First Britain was sending Prince William on a tour of duty there, then they were sending the new Royal Navy ship HMS "Dauntless", and this week we heard that a whole Westminster committee is soon due to visit the Islands. Argentina has reported the UK to the United Nations for its 'militarisation' of the area and has, along with some of its neighbour states, blocked Falklands-flagged vessels from entering its ports.

Much has been made of the fact that this year signifies the 30th anniversary of the Falklands conflict and this has been cited as a possible cause of the ratcheting up of tensions in the region. However, it seems that the more likely cause is the dramatic change in the Islands' value as an economic asset, after recent discoveries of generous oil deposits in the Isalnd's waters.

In today's Sunday Times (19 February 2012, Business Supplement, Page 2) they report new research from a City investment firm which shows that the Islands could generate a huge fortune from new oil finds currently beginning to be exploited / prospected by a number of firms: 'THE Falkland Islands could eventually reap $ 177 billion (£ 122 billion) in tax and royalties from oil production ... ' they report.

This figure represents almost $ 58 million income per head of population (currently pop. 3,100), an enormous income for the Islands where at present each resident pays an average of around $ 5,000 a year in taxes to the revenue (which is far exceeded by the cost to the UK of servicing and defending the islands).

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