From Falk­land herders to oil barons

Riches off­shore would change is­lan­ders’ lives

The Washington Times Daily - - Business - BYMICHAELWARREN

STAN­LEY, FALK­LAND IS­LANDS | Falk­land Is­lan­ders are so ac­cus­tomed to mak­ing do with what they’ve got that many still heat their homes with peat stoves, grow their own veg­eta­bles, re­pair their Land Rovers them­selves and raise chick­ens for their soft-boiled eggs.

But now they’ve struck oil off­shore — po­ten­tially vast stores of it. Bil­lions of dol­lars in taxes and roy­al­ties could soon flow their way, cre­at­ing an en­tirely un­fa­mil­iar chal­lenge: the prospect of sud­den and tremen­dous wealth.

If the first strike alone can at­tract the ma­jor in­vest­ment needed to start pro­duc­ing crude, this closely knit com­mu­nity of 3,000 peo­ple mostly de­scended from sheep farm­ers, sol­diers and sailors could find them­selves richer than sheiks.

Far from cel­e­brat­ing the mil­lions of dol­lars that oil ex­plo­ration is al­ready pump­ing into their trea­sury, how­ever, most is­lan­ders seem far more con­cerned about the trou­bles that rapid change might bring. They like their way of life just like it is: tran­quil, sur­rounded by na­ture and nearly crime-free.

“The im­por­tant word here is ‘po­ten­tial’ bolded and un­der­lined sev­eral times. I’m po­ten­tially a lot­tery win­ner,” said Stephen Lux­ton, the gov­ern­ment’s min­eral re­sources di­rec­tor. “Don’t get me wrong: ev­ery­body’s ex­cited about it, but we’re not go­ing to spend money we don’t have.”

The re­luc­tance comes from ex­pe­ri­ence. Daunt­ing po­lit­i­cal, tech­ni­cal, fi­nan­cial and en­vi­ron­men­tal ques­tions have kept the oil from flow­ing for years.

For one thing, Ar­gentina still claims the is­lands de­spite nearly 180 years of Bri­tish con­trol. Pres­i­dent Cristina Fer­nan­dez is try­ing to force Bri­tain into sovereignty talks ahead of the April 2 an­niver­sary of the 1982 Ar­gen­tine in­va­sion. For­eign Min­is­ter Hec­tor Timer­man said last week that Ar­gentina will pur­sue “ad­min­is­tra­tive, civil and crim­i­nal” penal­ties against the is­lands’ “il­le­gal” oil in­dus­try.

With neigh­bors like these, is­lan­ders hope Big Oil money will en­able them to fund their own de­fense and gain lever­age in global trade.

“Oil means se­cu­rity for us. If we go back to be­ing sheep farm­ers again, would the U.K. gov­ern­ment stick up for us as much? I’d like to think so, but maybe not,” said Dan Fowler, a bi­ol­o­gist born dur­ing the Ar­gen­tine oc­cu­pa­tion.

Most is­lan­ders were ten­ant farm­ers who strug­gled to make a liv­ing on wool dur­ing their first 150 years as Bri­tish sub­jects.

But now they are a self-gov­ern­ing Bri­tish Over­seas Ter­ri­tory, de­cid­ing for them­selves how to tax and spend. And they will sur­pass Arab oil barons in per-capita wealth if they get even a frac­tion of the $10.5 bil­lion in taxes and roy­al­ties some in­dus­try an­a­lysts pre­dict will flow from the Sea Lion field, dis­cov­ered north of the is­lands last year by Rock­hop­per Ex­plo­ration PLC.

While Rock­hop­per seeks a $2 bil­lion part­ner to move to­ward pro­duc­ing the crude, Borders & South­ern Petroleum and Falk­land Oil and Gas Ltd. are drilling two ex­ploratory wells each this year in much deeper water south of the is­lands.

It’s high-risk, high-re­ward, cost­ing them $1.3 mil­lion a day with less than a 25 per­cent chance of suc­cess. But a big strike could prompt a rush to join what might be one of the world’s last new sources of fos­sil fu­els.

LONDON | Eng­land’s laws re­strict­ing shop­ping hours on a Sun­day to six hours will be re­laxed dur­ing the Olympics in London this sum­mer, Fi­nance Min­is­ter Ge­orge Os­borne said.

The sus­pen­sion would run in Eng­land and Wales for eight Sun­days cov­er­ing the Olympics (July 27 to Aug. 12) and the Par­a­lympics (Aug. 29 to Sept. 9).

“We’ve got the whole world com­ing to London — and the rest of the coun­try — for the Olympics,” Bri­tain’s chan­cel­lor of the ex­che­quer told BBC tele­vi­sion. “It would be a great shame — par­tic­u­larly when some of the big Olympic events are on Sun­day — if the coun­try had a ‘closed for busi­ness’ sign on it.”

Cam­paign­ers against sev­en­days-a-week shop­ping hours claim it will open the door to a per­ma­nent shift in the rules, hit­ting fam­ily life. Cur­rent law also pro­tects the rights of work­ers who do not wish to work Sun­days.

SAN FRAN­CISCO | Ap­ple sched­uled an an­nounce­ment Mon­day on plans for its huge cash bal­ance, es­ti­mated to be at least $97 bil­lion from sales of its hugely suc­cess­ful gad­gets, among them the ipad and iphone.

An Ap­ple state­ment said Chief Ex­ec­u­tive Tim Cook and Chief Fi­nan­cial Of­fi­cer Peter Op­pen­heimer would hold a con­fer­ence call at 9 a.m. EDT “to an­nounce the out­come of the com­pany’s dis­cus­sions con­cern­ing its cash bal­ance.”

Ap­ple, with to­tal avail­able cash and se­cu­ri­ties at record highs — some re­ports said it has more cash on hand than the U.S. gov­ern­ment — has been un­der pres­sure to pay div­i­dends to share­hold­ers with some of those funds. The com­pany does not cur­rently pay div­i­dends on its com­mon stock, which lim­its own­er­ship of Ap­ple shares and holds down their value.

Mr. Op­pen­heimer said on a quar­terly con­fer­ence call with an­a­lysts in Jan­uary that the board was in “ac­tive” dis­cus­sions on ways to use the cash. For­mer Ap­ple CEO Steve Jobs, haunted by lean years in the mid-90s, likely stood in the way of re­turn­ing cash to share­hold­ers. Jobs died in Oc­to­ber.

NEW YORK | Brian Lamb, who helped found the publicaf­fairs cable net­work C-SPAN in 1978 and has been its CEO ever since, will step down at the end of the month, C-SPAN said Sun­day.

Mr. Lamb, 70, is hand­ing the reins to two co-ceos, Rob Kennedy and Su­san Swain, CSPAN said. He will re­main chair­man of the board and take on the new ti­tle of ex­ec­u­tive chair­man.

C-SPAN said the lead­er­ship tran­si­tion has been years in the mak­ing. Kennedy, 55, and Swain, 57, have been co-pres­i­dents of the com­pany since 2006. Ms. Swain joined CSPAN in 1982, and Mr. Kennedy joined in 1987.

Washington-based C-SPAN is a non­profit cre­ated and funded by cable- and satel­lite-tv com­pa­nies. It em­ploys 275 peo­ple.

NEW YORK | UPS has reached or is close to reach­ing a deal to buy Euro­pean pack­age-de­liv­ery com­pany TNT Ex­press, ac­cord­ing to me­dia re­ports Sun­day.

The on­line edi­tions of the Fi­nan­cial Times and the Wall Street Jour­nal, cit­ing un­named peo­ple fa­mil­iar with the talks, said the deal could be an­nounced Mon­day. They put the price tag around $6.8 bil­lion, or 5.2 bil­lion eu­ros.

The of­fer equates to 9.50 eu­ros per share. A month ago, Nether­lands-based TNT re­jected an “in­for­mal” of­fer from United Par­cel Ser­vice Inc. at 9 eu­ros per share. TNT shares closed Fri­day at 9.35.

A UPS spokes­woman said Sun­day that she could not con­firm the re­ports, but the com­pany said Fri­day that it was still in talks and that they were “con­struc­tive.” TNT did not respond to a re­quest for com­ment.

BEI­JING | Home prices in nearly two-thirds of China’s ma­jor cities fell in Fe­bru­ary from the pre­vi­ous month, the gov­ern­ment said Sun­day, as moves to cool the red-hot prop­erty mar­ket con­tinue to bite.

Of the 70 large and mid­sized cities tracked by the gov­ern­ment, 45 saw new-home prices fall month-on-month, the Na­tional Bureau of Sta­tis­tics said in a state­ment, down from 48 in Jan­uary.

Prices in an ad­di­tional 21 cities were sta­ble, and just four cities ex­pe­ri­enced price rises, it added.

Bei­jing has in­tro­duced a range of mea­sures aimed at curb­ing run­away prop­erty prices over the past year, such as bans on buy­ing sec­ond homes, hik­ing min­i­mum down pay­ments and in­tro­duc­ing prop­erty taxes in se­lect cities.

Oil wealth, if it oc­curs, stands to change the way of life on the Falk­lands. A sur­vey ship (top) sails in Stan­ley Har­bor be­fore leav­ing on a sci­en­tific mis­sion to study the un­der­sea to­pog­ra­phy for off­shore oil ex­plo­ration. Pen­guins gather on the coast of Mur­rell Farm near the north­east­ern corner of the is­lands.

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