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Gold/Mining/Energy : Sodra Petroleum -- Ignore unavailable to you. Want to Upgrade?

To: Greywolf who wrote (35)	8/9/1998 6:29:00 PM
From: Greywolf	Respond to of 133

Official Reaction To the 3% Oil Tax Proposal From: J. Brock (FINN) Date: 08 Aug 1998 Time: 19:01:30 Remote Name: Comments H.E. SPEAKS OUT ABOUT THE PROPOSED 3% ARGENTINE TAX ON FALKLANDS OIL REVENUES By J. Brock (FINN) FOSA operators exploring for oil in the North Falklands Basin have said they would not pay any 3% royalty imposed by the Argentines on hydrocarbons extracted from their tranches. Indeed, the proposed law is causing problems with companies which operate already in Latin America. H.E. the Governor Ralph has spoken out about the proposed argentine Bill in relation to the 1995 Joint Statement. RR The Joint Declaration has been very much in the news both here and in Argentina over the last week or so, partly because it was the subject of discussion when we had another of the meetings of the Joint Commission of the South West Hydrocarbons Commission. Last week, of course, Falkland Islands Government representatives attended those discussions on the British side. Mr. Lloyd also took the opportunity on his visit to impress on the Argentines that Britain takes a serious view of of their Hydrocarbons Bill. FINN What is the official position about this bill before the Argentine Congress? RR The position is that the Argentine Bill is in the lower house of their Congress and I don't know what the prospects of that bill are for its passage into law. The Argentine authorities can be in no doubt about the view of the British Government of that bill and of its potential effect. Essentially there are three concerns that we have about it. One is that it may be incompatable with the Joint Declaration to the extent that it may prevent the development of oil exploration in the South West Atlantic. Secondly, it may well, in our view, be incompatable with the principles of extra-territoriality over world trade. Thirdly we believe it is having a dampening effect on the oil companies involved in exploration in the South West Atlantic. That's not good, particularly if we are going to have, in due course, a successful launch of the Special Cooperation Area. FINN There could be no oil out there at all. What progress is being made in the drilling by Shell? RR Oil exploration activity in the North Falklands Basin, meanwhile, continues a pace. We are on track and as you know Shell are drilling the third well in the Northern Most Tranche in the North Falklands Basin. Shell's policy is not to make press statements every time the drill encounters anything. The Falkland Islands Government wouldn't want to do that either. FINN There have been reported leaks of oil finds in the press. Given what you just said, are these kinds of stories helpful, especially to those who invested in Desire Petroleum? RR We have all seen the rollercoaster effect of reports in the press - whether there is or isn't oil. I would simply like to remind everybody that exploration is a dicy business. There is no guarantee that there is any oil there. The odds were said to be one in ten that oil would be found in commercial quantities. There are several more wells to go so I think we should all contain ourselves in patience, not get too excited about this and wait and see what happens. Obviously we hope there is oil because that would be good for the long term future of the Falkland Islands. If there isn't (and I must emphasize that the odds are that there won't be) that's all right, too. Provided we husband our resources carefully, we are not in a bad position in the Falkland Islands. Whether it be press speculation about the proposed 3% tax or the quantities of oil we can expect from each exploratory drill, nothing can be certain as we won't know for some time officially whether there are hydrocarbons in sufficient quantities to be viable in the North Falklands Basin. After all, 3% of nothing is nothing and that could well be what is found.