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Malvinas oil companies lease rig for 2015

An Eirik Raude drilling rig is seen off the Spanish coast.

Move marks continuation of exploration in defiance of Argentine complaints over the activity

Energy companies active in Malvinas have leased a rig for their 2015 drilling programme, paving the way for oil and gas exploration to continue next year in the region contested by Britain and Argentina.

London-listed Premier Oil said it had contracted the rig to drill a minimum of four wells in the North Falkland (Malvinas) Basin with partner Rockhopper.

Cyprus-based Ocean Rig said it had signed a leasing contract for its Eirik Raude drilling rig to be deployed in waters off the Malvinas for around 260 days.

Premier Oil is sharing the rig with Noble Energy, which will deploy the equipment to drill another two wells elsewhere in the South Atlantic archipelago.

Tensions between Britain and Argentina over the sovereignty of Malvinas have experienced long dormant periods and regular awakenings since two countries went to war in 1982, with the latter increasing in frequency particularly as oil exploration has gathered pace over the last decade.

Congress recently ratified a law attempting to block London-listed firms from drilling for oil and gas in the area, with the law highlighting that companies with a presence in Malvinas will be barred from lucrative projects on the mainland, such as the promising Vaca Muerta shale oil and gas formation.

The shares of Malvinas explorers are prone to volatile fluctuations as exploration develops, with the real amount of fuel available still uncertain.

For instance, negative exploratory results on November 26, 2012, instantly halved the Falkland Oil and Gas share price overnight.Falkland Oil and Gas also said it was participating in the 2015 drilling programme with Premier Oil and Noble Energy.

The rig, which is expected to arrive in Malvinas between February and May next year, will first drill at the Premier Oil-operated Zebedee and Isobel/Elaine prospects in the North Falkland Basin.

Noble Energy obtained the third and fourth drilling slots through a rig-sharing agreement with Premier Oil before the equipment is expected to return to northern Malvinas to drill another two wells.These are likely to be the Jayne East and Chatham/Sea Lion West Flank wells, Rockhopper said.

Premier Oil has been searching for a partner for its Sea Lion project, a field that is expected to start producing oil in late 2018 and will require an estimated US$5.2 billion in investment.

Premier Oil also said on Wednesday it had discovered more gas at its Tuna Block in offshore Indonesia, increasing the site’s gross resource estimate to 100 million barrels of oil equivalent.

Herald with Reuters

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