Malcolm Rifkind, the Foreign Secretary, and his Argentine opposite number, Guido di Tella, signed a deal at UN headquarters in New York yesterday which fixes the maritime boundary between the islands and Argentina. It could eventually lead to a massive oil and gas bonanza for the 2,000 Falklanders.
"If exploration leads to exploitation and that results in significant resources, then the beneficiaries of that will be the Falkland Islands government," Mr Rifkind said yesterday.
"The Falkland Islands government itself has decided that these resources should be shared with the United Kingdom government because they recognise the substantial financial burden of providing the necessary security for the islands," he said.
Speaking from Stanley yesterday, John Cheek, a member of the Falklands' Legislative Council, confirmed that the council had earlier this year written to Douglas Hurd, then Foreign Secretary, to confirm that if large royalties accrued to the islands the Falklanders would repay money spent on them by Britain.
"In our list of financial priorities the future of the islanders will come first, followed by the current defence costs and thereafter the costs of defence and infrastructure paid by Britain since 14 June 1982, the date of the Argentine surrender," he said.
The agreement clears the way for international companies to seek oil and natural gas around the Falklands, where there are thought to be huge resources of energy. Several decades ago the US Geological Survey forecast that the oil and gas fields in the area could rival in size those in the North Sea, implying potential royalties of several billions of pounds.
Despite claims by President Carlos Menem that the bilateral agreement strengthens Argentina's claim to the Falklands, any oil or gas find could sound a death knell for Argentina's aspirations to control the islands, which it seized briefly from Britain in 1982.
Oil industry sources say that Britain, having fought a short but bloody war to regain the territory, with no prospect of immediate economic return, is hardly going to give away without a fight what might be a huge economic resource.
The Falkland Islands government has already sold seismic data collected about the area to interested oil companies, and will start formally to invite bids for 19 offshore areas at a presentation in London on Tuesday, and a few days later it will repeat the process in Houston, Texas.
Any competent company will be allowed to make a bid and those which are successful will be announced shortly after the deadline of July next year. Argentine companies will be welcome but limited to no more than 49 per cent of each of the areas they show an interest in.
As for the islanders themselves, one leading British geologist said yesterday: "There are only 2,000 Falklanders - it won't take a very big find to make them very rich."