Argentina running out of options in falklands oil fight news story imageAs Argentina's oil battle with the United Kingdom rages on, the only other obstacle the South American country can throw at oil companies planning to drill near the Falkland Islands is to interdict U.K. ships or equipment - but regional expert Riordan Roett doubts the Argentines are “stupid enough to do that.” This would be a “very dangerous move” on the part of the Argentine government, said Roett, director of Latin American studies at Johns Hopkins University in Washington. Argentina, which went to war with the U.K. in 1982 over Falklands’ sovereignty, is “very careful” about challenging the British in reaching the islands, Roett noted.

The dispute between the old foes erupted in February when U.K.'s Desire Petroleum towed an oil rig from Scotland to the South Atlantic to drill near the Falklands. Experts tout the area beneath the islands contains as much as 60 billion barrels of crude oil but there are many doubts about this claim. Geologists and political-risk specialists say such a vast deposit is possible -- after all, the Atlantic Coast downward from Brazil boasts a great deal of oil – but whether the Falklands is the next place to find such resources will be a question mark for “a couple of years,” Roett said.

Oil and Latin American experts, moreover, have mixed opinions about whether U.K. oil firms actually need the Argentine government's help to siphon out any oil from the contested waters. U.K. firms can do without Argentine infrastructure but much will depend on current technologies, Roett argued. If companies can retrieve and pour oil into super tankers, it can then be shipped back to the U.K. or wherever their clients are based “without worrying about Argentina -- unless the Argentinians were stupid enough to try to stop the tankers,” he said.

Even if commercially viable oil at current prices or natural gas is found, projects would “somehow require the use of infrastructure in Argentina” such as ports and pipelines, Daniel Kerner, a Latin America analyst at the Eurasia Group in New York, told OilPrice.com. At the very least, he said, this infrastructure would help make the project more viable, otherwise all of the needed equipment would have to be shipped in, he added.

The price of a barrel of oil when potential…

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