Argentina to take criminal action against Navitas, JHI for unauthorized Falkland Islands oil exploration

Argentina said Sept. 7 it will take legal action against Navitas and other companies exploring for oil in contested waters around the Falkland Islands in the South Atlantic, saying that these firms have not secured its authorization for the projects.

In a statement, the Office of the Presidency said the "criminal complaint" will be filed against Israel-based Navitas Petroleum and two of its subsidiaries, as well as the Canada-based firms JHI Associates and Eco Atlantic Oil & Gas, a shareholder in JHI.

The complaint against Navitas and JHI alleges that these companies hold licenses granted by the government of the United Kingdom "for the exploration and/or exploitation of hydrocarbons in the North Falklands Basin," the office said.

This violates Argentinian law, which requires any exploration in these contested waters to gain authorization from Argentina.

The Argentinian government said the complaint is also against "all directors, managers, trustees, members of the supervisory board, administrators, agents, representatives, or authorized persons who may have been involved in the punishable act."

Navitas and JHI are exploring the Sea Lion project, which Argentina claims could begin producing oil in the coming months.

Stepping up efforts

The filing of the criminal complaint comes after the Argentinian government said Sept. 4 it would sanction oil companies operating in the disputed waters around the Falkland Islands, a self-governing UK territory. The sanctions include not being allowed to operate in Argentina, where there are huge resources in the Vaca Muerta shale play and potential for offshore oil.

Argentina's right-wing president, Javier Milei, renewed the country's efforts on Sept. 3 to reclaim the South Atlantic islands, which are called Islas Malvinas in Argentina. According to the United Nations, which is mediating the sovereignty of the islands, any decision about developing natural resources there must be bilateral until the underlying issue of sovereignty is settled.

Argentina said in its latest statement that it wants to safeguard its sovereignty over the islands and the maritime border, as well as protect the natural resources there.

"The defense of sovereignty must be exercised through all legal and institutional means available to the national government to prevent third parties from carrying out activities involving resources belonging to Argentina," it added.

As part of this defense strategy, Milei ordered his economy minister, Luis Caputo, to prioritize the construction of a naval base and related projects to protect Argentina's interests over the islands. Both countries fought a brief war over the islands in 1982.

Production potential

Daniel Dreizzen, director of Aleph Energy, a consulting firm in Buenos Aires, said in a message by WhatsApp on Sept. 7 that Sea Lion has 300 million barrels of reserves and could produce 50,000 b/d, adding that it is "a concrete project, not just an exploratory expectation."

The challenge for Sea Lion's development is that it needs financing, technology and oil services, and with Argentina's own oil production on the rise, many of these suppliers are already operating in Argentina.

These restrictions could make it harder for Sea Lion's developers to move forward, Dreizzen said.

"Argentinian restrictions on companies engaged in hydrocarbon activities in the Islands may take on much greater significance as a means of exerting pressure," he added.