27 Feb 2010

BHP warned over Falklands

7:51 am on 27 February 2010

Argentina's ambassador to Australia says BHP Billiton will face business sanctions if it proceeds with oil exploration in Falklands waters.

BHP has a licence to explore off the Falkland Islands and is scheduled to start doing so in the next four months.

But Ambassador Pedro Villagra says BHP's business in Argentina will suffer if the company proceeds.

He said it will not be allowed to carry out some activities in Argentine territory in the mainland.

Argentina says the Falkland Islands and the surrounding seabed are its territory - a claim that sparked a war with Britain in 1982.

Argentina has never relinquished its claim and the dispute flared again this week when a British oil exploration firm started drilling off the Falkland Islands.

in partnership with Falkland Oil and Gas Limited, BHP holds 14 exploration and production licences for the East Falkland Basin - licences which have brought Argentina's wrath to Australia.

Ambassador Villagra says Argentina officially warned BHP when it began talks with Falkland Oil and Gas Limited in 2007.

The ABC reports BHP does not currently have any operations in Argentina but has held stakes in gold and copper mining projects in the past.

Ambassador Villagra says all companies should cease oil exploration off the Falklands until there is a diplomatic solution.

Geologists estimate there are up to 60 billion barrels of oil under the seabed near the islands.