Argentina warns it wants Falklands royalties-paper
BUENOS AIRES, May 4 (Reuters) - Argentine Foreign Minister Guido Di Tella said the government would use all means at its disposal against oil firms drilling off the disputed Falkland Islands if they do not pay a three percent royalty, press reports said on Monday. ''If the companies pay us the three percent, we won't give them a hard time. They don't pay the three percent, we will give them a hard time,'' Di Tella told Clarin newspaper in an interview.
Argentina and Britain fought a 10-week war in 1982. Argentina was defeated, but continues to press its 150-year-old territorial claim on the South Atlantic archipelago. Both countries resumed diplomatic links in 1989, and in 1995 signed a complex agreement on oil and gas exploration that allows each to levy royalties -- the Falklands government nine percent and Argentina three percent -- without recognizing each other's right to levy the charge.
Di Tella said he expected Congress to approve a bill to levy the three percent royalty this week. The ruling Peronist Party is the largest minority in the lower chamber and has a majority in the Senate. Di Tella said that if companies don't pay the royalty, the Argentine government could block their activities on Argentine territory. However, Argentina would have only a limited ability to influence companies that do not do business within its borders.
Drilling for oil off the Falklands began late last month, with Amerada Hess (AHC - news) announcing that it is operating a rig. When reminded that Amerada does not conduct business on Argentine soil, he replied, ''Well, they (would) lose the possibility to participate in the Argentine market'' if they did not pay the royalty. Asked whether that was the extent of Argentina's ability to respond to such a situation, he quipped: ''No. We launch a hostile action. In two days, we launch 40 tanks with parachutes and torture the British ambassador...''
The Borgny Dolphin rig was hired by Amerada Hess for three years under the Falklands Offshore Sharing Agreement (FOSA), which also includes Royal Dutch/Shell (RD.AS) (quote from Yahoo! UK & Ireland: SHEL.L), Lasmo Plc (quote from Yahoo! UK & Ireland: LSMR.L), and Sweden's Lundin Oil AB (LOILb.ST).
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Argentina proposes sanctions on Falklands oil firms
By Axel Bugge
BUENOS AIRES, May 5 (Reuters) - Argentina's Congress will discuss on Tuesday a proposed law to sanction oil companies drilling off the Falkland Islands if they do not respect Argentine laws when they operate in the disputed region. The draft bill states that any firm drilling off the islands, over which Argentina and Britain went to war in 1982, has to adhere to Argentina's rules on oil drilling, according to a copy of the proposal acquired by Reuters.
If firms do not abide by those rules, ''they will be barred completely from carrying out any commercial activities on Argentine territory.'' Fines of $10 million could be levied. The proposal will be discussed by two parliamentary committees later Tuesday and is likely to be debated in the lower chamber of Congress on Wednesday.
Although Eduardo Menem, a senator for the ruling Peronist Party and President Carlos Menem's brother, first proposed the bill last year, it is now being rushed through after drilling for oil off the islands commenced last week. U.S. oil company Amerada Hess Corp's (AHC - news) Borgny Dolphin rig began drilling off the Falklands last week. Buenos Aires reacted with a statement saying it ''does not recognize'' Britain's right to authoriize such activities. A spokesman for Sen. Menem told Reuters Tuesday: ''Judging by comments by lawmakers, the bill is being processed in an accelerated fashion,''
Argentina was defeated in the 10-week war with Britain. In 1989, the two countries resumed diplomatic links, although Argentina maintains its 150-year-old territorial claim. They signed a framework accord on oil and gas exploration around the Falklands, which Argentina calls the Malvinas, in 1995 but oil exploration remains a sore point for Argentina.
The bill would complement a government-sponsored change to the current Hydrocarbons Law slapping a three percent royalty on companies drilling off the Falklands. That law establishes the overall framework for oil exploration in Argentina. Foreign Minister Guido Di Tella said last week: ''If the companies pay us the three percent, we won't give them a hard time. They don't pay the three percent, we will give them a hard time.'' Government officials say the change to the Hydrocarbons Law will be put to Congress this week, probably on Wednesday.
Separately, the Alliance opposition has summoned Di Tella to explain his stance on the Falklands in Congress. One of the issues it wants to be clarified is whether the government is negotiating with Britain on oil royalties in the area covered by the 1995 agreement. That would be an ''act which could be interpreted as a tacit recognition of Britain's sovereignty over the waters,'' the Alliance summons said.
Oil industry officials say there is a 10-15 percent chance of finding commercial quantities of oil in the remote islands, one of the world's last unexplored sedimentary basins.
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