Political manoeuvres over Falkland oil as Rockhopper eyes partners

Oil firm Rockhopper Exploration is expected to name a partner to develop its politically sensitive discovery off the Falkland Islands within three months.

Edinburgh-based Cairn Energy is thought to be among the firms being considered. But with the waters the subject of a territorial dispute between Britain and Argentina, some analysts believe Rockhopper may chose an American partner in order to minimise the political risks in the venture.

Falkland Oil and Gas, another British oil explorer which is looking to farm out its interests in the South Atlantic, has said it is unlikely it could work with a firm that has interests in Argentina or its South American allies which include Brazil and Venezuela.

Rockhopper executives told a conference last week that seven or eight companies were interested in bidding, according to investment bank Morgan Stanley.

A research note from the bank, which hosted the conference, also said the UK-based company could give up its lead role in the Sea Lion field it believes could have 1.3 billion barrels of oil in place.

“Rockhopper would be willing to relinquish operatorship, if the farm-down interest was high enough,” said the note.