Britain and the Falkland Islands have made a deal to split any proceeds from the controversial oil drilling programme in the South Atlantic.
UK ministers have revealed that the Executive Council in Port Stanley had "offered to share some of any future hydrocarbons-related revenues", which could be worth billions of pounds. If a 30-day drilling programme begun by a British firm last week strikes oil, the yield from corporation taxes and royalties in the fields north of the islands alone could be more than £100bn.
A Foreign Office source said the Government had already begun negotiations over the eventual share-out, and had reached an "understanding" that could see the Treasury taking up to half the profits. Officials have pointed to Britain's multimillion-pound programme of support to the islands over almost three decades since the war following Argentina's invasion in 1982.
Argentina, which disputes the British claim to the Falklands, last week asked the United Nations Secretary General, Ban Ki-moon, to bring the UK into talks over the islands' sovereignty. The Foreign Secretary, David Miliband, said British oil exploration in the area was "completely in accordance with international law".
Ministers have been cautious about who would benefit from the bonanza since the potential reserves were first highlighted almost 20 years ago. The Falklands Executive Council offered in 1994 to share any proceeds as a contribution towards the defence of the islands. The islands' ruling executive council later warned that the spectacle of the Treasury taking oil revenue would be "a propaganda gift to the Argentines, who would say it proved that Britain had an exploitative, colonial attitude to the Falklands".
The Liberal Democrat MP Bob Russell said: "They have been sustained since before the Falklands war to the tune of hundreds of millions of pounds from the taxpayer. It is only right that, if they are going to become instant millionaires, they should share that with the UK and with neighbouring British territories such as St Helena and Ascension Island."Reuse content