guidelines have also been set up to mitigate the effects of seismic surveys on cetaceans. Additionally, independent observers have been placed on support vessels during well tests to observe bird interactions during periods of flaring.
than it would be in, say, the North Sea. The government is mindful of this and therefore has not factored any future oil production revenues into its long-term financial planning.
Should long-term oil production be established, the applicable fiscal system comprises of variable acreage rentals, a nine-per-cent royalty on production and corporation tax of 21 per cent on profits up to £1 million and 26 per cent thereafter. This is considered to be a very favourable fiscal regime by international standards and was originally set up as such to reflect the high-risk, frontier aspect of exploration in the Falklands. It is envisaged that any oil production would be carried out by means of floating production and storage offshore vessels (FPSO), a system which requires no oil storage or processing
infrastructure to be built onshore. Any oil produced would then be transported to refineries by shuttle tankers without even touching the Islands. In the event that a gas discovery was deemed
commercial, onshore infrastructure (such as a refinery) and the necessary pipelines would need to be built. However, the sheer cost of this and the Islands’ distance from markets make the quantities of gas required for a commercial
discovery too high to make it likely. FPSOs are the preferred model of oil production development as they have the least impact physically, socially and environmentally.
Protecting the environment – publicly The environmental impact of any exploration and production is a very important factor to oil exploration in the Falklands. The Islands boast a pristine natural environment and an abundant range of wildlife, much of it coastal or marine, which the government is committed to protecting. Before commencing any drilling activities, operators are obliged to submit a comprehensive environmental impact statement (EIS) outlining how their operations may affect the local environment and planned steps to alleviate any impacts. All EIS documents are made public and distributed to local environmental non-governmental organizations, interested government departments and other stakeholders, who are given 42 days to comment. Further to this, the government’s Environmental Planning Department can (and often does) engage an independent, external body to review the document and provide an impartial evaluation of
its contents. Although the Environmental Planning Department makes a
recommendation to the Mineral Resources Committee on whether to approve an EIS, this
recommendation is made entirely independently of the Mineral Resources Department, which in this instance simply acts as a conduit to aid the public consultation process. Further to Environmental Impact Statements, operators submit oil spill contingency plans and waste management plans, which are again distributed among stakeholders. Again, the limited resources in the Islands are a factor when considering a response to an oil spill, and therefore as part of their oil spill response plans, all operators retain the services of specialist pollution prevention companies to airlift containment and dispersal equipment into the Islands in the event of an oil spill. With regards to waste management plans, there is a big emphasis on “zero-impact”, that is to say the onus is on the operators to ensure that as much of the waste generated by their activities as possible is not left on the Islands or in their waters but rather shipped back to where they can be disposed of safely and responsibly.
An Offshore Hydrocarbons Environmental Forum encompassing government bodies, non-governmental organizations, oil industry representatives and local fishing companies has been created in order to identify and resolve any environmental issue that may arise. In addition, an Oil and Gas Development Forum has been formed to bring together local companies and the oil industry to discuss opportunities and maximize local participation in supporting hydrocarbons development.
The Falklands’ right to develop
Exploration in the Falklands has received much media attention due to political tensions with Argentina over its sovereignty claim; it should be highlighted that much of this is down to media sensationalism. However, although Argentina has introduced measures designed to hamper exploration in the Islands, such as a blockade contravening international maritime law, exploration has continued unhindered. Sadly, while it hasn’t affected oil exploration, the blockade has affected everyday life in the Islands. The disruption of all- too-vital shipping links with the South American continent has driven up the cost of living due to the increased cost of importing goods, especially fresh fruit and vegetables.
Nonetheless, the Falkland Islands and U.K. governments have no doubt that exploration in the Islands fully complies with international law and it is the legitimate right of the Islanders to explore and exploit our natural resources.