Drilling firm raises hopes of Falklands oil strike

A British oil and gas explorer today revealed it may have discovered oil off the coast of the Falkland Islands, raising excitement about what could potentially be the first viable find in the politically controversial field.

Shares in Rockhopper and other companies exploring the Falklands basin soared after its announcement, which was based on initial data from its Sea Lion platform.

The company said it was now considering whether to plug the well, suspend it for future testing or drill an appraisal well.

"We are extremely excited by the results of this well," said Managing Director Samuel Moody. "While we are presently acquiring additional data, current indications are that we have made the first oil discovery in the North Falkland Basin."

Shares in Rockhopper surged 153% to 93.5p. Desire Petroleum, which earlier this year abandoned a well in the basin, jumped 63% to 61.5p Falkland oil and Gas lifted 10.3% to 150p and Borders and Southern rose 18% to 54p.

However, exploration of the waters around the Falklands is controversial amid the long-running dispute between Britain and Argentina over ownership of the islands.

The UN General Assembly called for Argentina and Britain to negotiate sovereignty over the islands following the 1982 war. But Britain has ruled out any concessions.

When the exploration plans were first announced, British Defence Minister Bill Rammell said his government had a "legitimate right" to build an oil industry in its waters.

Argentina's Foreign Minister Jorge Taiana has called Britain's oil-drilling operation "an illegal act that goes against international law" and against UN resolutions asking that neither side take unilateral actions that could aggravate the situation.

Argentina has tried to disrupt the exploration by issuing a decree obliging ships using Argentine ports to seek a permit if they enter or leave British-controlled waters - Britain told its ship captains to ignore the restrictions.

Rockhopper intends to drill a well at another prospect, the Ernest, later this year and plans to work with Desire on further wells.

Desire abandoned its initial exploration well in March after data showed that oil might be present, but was of low quality. It is currently drilling further wells.