Chavez: 'Queen of England, the empires are over... give the Falklands back'

Venezuela's President Hugo Chavez weighed into the row over oil and gas exploration in the Falkland Islands' territorial waters yesterday, supporting Argentina's claim that drilling started earlier this week by a British company is illegal.

Desire Petroleum, a junior exploration group listed on AIM, said on Monday that it had started a drilling programme about 100km north of the islands. The move has drawn fierce criticism from Buenos Aires, which claims sovereignty over the islands.

Christina Fernandez, the Argentine President, asked a summit of Latin American and Caribbean leaders in Mexico for support in the row which has escalated in recent weeks since Desire announced its plans.

"We support unconditionally the Argentine government and the Argentine people in their complaints," Mr Chavez said. "That sea and that land belongs to Argentina and to Latin America." He also called directly on the Queen to hand the territory over.

Argentina has claimed the South Atlantic islands since the 19th century, when Britain first established rule. In 1982 the two countries fought a two-month war over control of the Falklands after Argentina invaded the islands.

Desire is the first of a number of so-called frontier exploration groups that have been granted licences to hunt for oil and gas in fields which some analysts believe could match the North Sea in size.

The drilling is high risk, however. Desire and the other companies that are about to start operations have spent about $50m in transporting a rig to the islands, with analysts saying that the groups have only a 20 per cent chance of success.

"Geologically the area that Desire is drilling is like the North Sea, and if discoveries are made, the suggestion is that the field could hold 200 million to 300 million barrels of oil, which is sizeable for these companies," said Richard Rose, an oil and gas analyst at Oriel Securities. "But it is still very high risk. The likes of Shell undertook a programme in the same area about 14 years ago and found only traces of oil."

Desire is working in an area north of the Falklands. Another company, Falkland Oil & Gas, is set to start drilling to the east of the islands in April in an area that has not been explored in the past, but which initial geological surveys suggest could contain as many as one billion barrels of oil.

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