A joint venture led by Australia's Global Petroleum Ltd said yesterday it had won the right to explore for oil and gas in the inhospitable waters south and east of the Falkland Islands.
The Falkland Islands Hydrocarbon Consortium said it had been awarded 10 adjoining exploration licences covering 57,700 square km off these remote British-ruled islands east of Cape Horn at the southernmost tip of South America.
"The southern Falklands Islands province is one of the last international frontiers for new petroleum exploration, and the licences offered are on favourable industry terms," Global Executive Chairman John Armstrong said.
Hardman Resources NL, which has 30 per cent stake in the venture, said the new region was geologically different from the northern basin, which was explored in the late 1990s with disappointing results.
Analysts expressed some reservations about the plan.
"I don't necessarily think this is going to have a great deal of appeal to a lot of domestic investors. It's a big bite of the cake to take all in one mouthful," Auzeq Securities oil and gas analyst Andrew Williams said.
"It's pretty treacherous waters, it's not going to be the easiest place in the world to exploit and it is going to be expensive."
Global is the operator with 50 per cent, while Falkland Islands Holdings Plc, the main infrastructure and commercial entity on the islands, holds the remaining 20 per cent. Falkland shares were up 4.3 per cent at 182 pence at 1040 GMT in London.
Hardman's London listed shares were five per cent higher at 26.8 pence.
Global, which emerged from the structuring of former mineral explorer Apollo Group Ltd, plans to relist on the Australian Stock Exchange next month and is currently undertaking an A$15 million ($8.5 million) capital raising.
The presence of oil in the South Atlantic was first proved in 1974, but the distance and isolation of the Falklands deterred oil companies from exploring the area until the 1990s.
Britain fought a war with Argentina to keep control of the islands in 1982. Argentina has disputed British sovereignty since 1833.
The exploration group said initial work would include the reprocessing of existing seismic data, followed by new seismic surveys to detail the hydrocarbon system and identify prospects.
Global said last month it planned to spend A$4.7 million on exploration during the first 18 months after listing and a similar amount the following year.