David Hudd says Falkland Islands could be on verge of exciting future
Saturday January 7,2012
THIRTY years after the war that defeated the Argentinians, the Falkland Islands are facing another invasion. Although there is still some sabre rattling from Buenos Aires, those eyeing up the islands this time have a more peaceful target in mind. The Falklands are the focus of a “black gold rush” as a string of exploration companies seek to be the first to find commercially viable reserves in the region.
So far, a number of wells have turned out to be duds, but one firm, Rockhopper Exploration, has struck what could be a huge field at its Sea Lion prospect in the North Falklands Basin, raising hopes of more to come.
As summer arrives, the huge Leiv Eiricsson drilling rig has been towed half way round the world to begin a new round of drilling for two rivals, Falkland Oil and Gas and Borders & Southern.
There is a growing possibility that the islands could be at the centre of a boom to rival that of the early North Sea fields in the Sixties and Seventies, though investors know that such frontier exploration can be high risk.
Not only does 2012 mark the anniversary of the Falklands War, it is also 160 years since the foundation of the Falkland Islands Holding Company which operates a range of businesses on the islands from stevedoring and insurance to shops, car showrooms and tourist boat trips.
Chairman David Hudd says it is a very exciting time for the company, the islands and the islanders and his company stands to be a winner whatever the outcome of drilling.
It has a direct stake of nearly 6 per cent in Falkland Oil and Gas but stands to benefit if a rival strikes it rich because of its key role in the local economy and what could turn out to be lucrative property and land holdings.
Founded in 1852 with a Royal Charter, FIH has undergone a number of changes of ownership and was floated on the junior Aim market in 1998, with a current stock market value of £26million.
Hudd said: “This will be our biggest year. We will know if Rockhopper are able to develop their field. I’m more excited about the prospects than at any time in the 10 years I’ve been involved.”
The view of the company, which also owns the Portsmouth Harbour Ferry Company in England and London-based art transport and storage specialist MoMart, is that there is an 85 per cent chance of commercial oil production.
Although the infrastructure has been much improved since the war, there are few hotels, no civilian air terminal and only limited flights.
If oil is discovered it would trigger huge demand for additional flights and accommodation, creating big opportunities for FIH to develop its own services and work alongside companies brought in for major projects.
The islands already attract more than 50,000 visitors a year eager to see the region’s amazing wildlife.
Hudd said: “This is looking to be something on the verge of being very exciting. It could be very, very big, running into billions of pounds.” But he cautioned: “It is not going to happen overnight. We are talking over a decade.”