Sovereignty over the Falkland Islands has historically been a point of contention involving many states. But while most have abandoned their claims, the Argentine Republic and the United Kingdom of Great Britain and Northern Ireland continue to assert their respective sovereignty. The dispute between Argentina and the United Kingdom began in 1833, when the British returned and reclaimed the Falklands from Argentina. Recently, this dispute has evolved to encompass each state’s interest in obtaining control of the Falklands’ natural resources, particularly in developing oil and gas around the islands. Sylvia Pfeifer, Exploring for Oil in Falklands Threatens to Open Old Wounds, Financial Times, Dec. 22, 2011.
While conservative estimates suggest a viable recovery of 3.5 billion barrels of oil, the British Geological Society has suggested that 60 billion barrels are recoverable from the islands’ exclusive economic zone. Consequently, British companies have commenced exploration and appraisal operations that have “outraged” Argentina, which has accused the United Kingdom of stealing its resources. Brian Swint, Oil Grab in Falkland Islands Seen Tripling U.K. Reserves, Jan. 20, 2012, Bloomberg Businessweek. Recent escalations in the region indicate the significance of the sovereignty dispute for energy companies deciding to invest in the Falklands. The United Kingdom has posted Prince William to the islands, along with its most advanced nuclear-missile warship. Martin Walker, The Falklands Again, United Press International, Feb. 13, 2012. Argentina has taken its protest of the British oil campaign to the United Nations, citing British militarization in the region. Argentina Takes Falkland Islands Protest to UN, The Guardian, Feb. 10, 2012. And the United States, whose companies are investing in the Falklands, has endorsed British sovereignty over the islands. Steve Hawkes, US firm's £1bn for Falklands Oil, The Sun, Jan. 22, 2012.
For companies pursuing oil exploration and drilling in the region, these events jeopardize not only geopolitical stability, but also millions in investments.