Halliburton Shuns Falklands Oil Project

One of the world’s largest oilfield service providers has refused to get involved in the Sea Lion oil project off the coast of the Falkland Islands, amid a step-up in pressure from the Argentine president on the companies leading the work. Halliburton, in fact, refuses to take part in any oil or gas development around the contested islands. The company’s declaration of non-involvement follows contacts with the Argentine government, Halliburton has said. These contacts, according to the company, featured “questions concerning criminal and civil enforcement under existing legislation, proposed new criminal and civil measures, and regulations governing right-to-contract certification.” The Sea Lion project began as an oil discovery back in 2010, when UK-based Rockhopper Exploration struck crude in the deep waters off the Falklands. With reserves estimated at some 315 million barrels of recoverable sweet crude, peak production was seen at 50,000 barrels daily. Since the beginning, however, work on the discovery has faced a series of setbacks due to its capital-intensive nature because of its location plus pressure from Argentine, which repeatedly signaled it very much minded offshore oil development off the Falklands, which it claims as its own. Things around Sea Lion finally started moving in 2021 when Israeli Navitas Energy took over the operatorship of the project with a 65% stake, and Harbour Energy, an earlier investor, left. Related: Gulf Producers Say Importers Should Share the Cost of Hormuz Workarounds The final investment decision on the project was made in December last year, with first oil expected to start flowing in 2028—and not a moment too soon, after Aramco’s chief executive said earlier this week it would take the world up to two years to refill drained crude oil inventories. But it is still too early for optimism about Sea Lion, because the pressure campaign from Buenos Aires is not stopping. Last month, President Javier Milei threatened to impose sanctions on the companies drilling near the Falkland Islands, after reiterating his claim that the territory under British control is Argentine. The Falklands are “historically and legally” Argentine, Milei said in a televised address in early September, apparently emboldened by the recent hints from U.S. President Donald Trump that the U.S. could review its neutrality on the issue and may not back the UK in the Falklands dispute because of the lack of UK support for the U.S. war in Iran. Then, later in September, Milei threatened to sue the UK if Navitas Energy and Rockhopper Exploration did not stop their drilling work offshore the islands. “I instructed the Foreign Ministry and our legal teams to initiate international arbitration against the United Kingdom for the illegal plundering of our resources through the Sea Lion Project in the North Malvinas Basin,” the Argentine president wrote on the social media platform. “If in 2 weeks the United Kingdom does not halt the illegitimate exploitation, we will go to the International Tribunal for the Law of the Sea. THE MALVINAS ARE ARGENTINE, and they are defended with facts, not words,” Milei also wrote. Halliburton’s declaration about its non-involvement is the latest example of Argentine pressure, which quite likely has a lot to do with Buenos Aires’ own plans for energy expansion, driven by the Vaca Muerta shale formation. The play has been breaking production records consistently, turning oil and gas into key drivers for economic growth. According to Rystad Energy, production of crude oil in Vaca Muerta could hit 1 million barrels daily by 2030. Clearly, with such potential for growth and the resulting regional dominance, Argentina does not need the competition of a field that is in a contested territory, no less. Now, the question for Navitas Energy and Rockhopper Exploration is whether they could find an oilfield services provider who would agree to face the risk of lawsuits and sanctions alongside them. By Charles Kennedy for Oilprice.com More Top Reads From Oilprice.com