Argentina’s campaign to sanction Falklands oil developers is starting to bite, as the joint venture partners, Israel’s Navitas Petroleum and Rockhopper Exploration, are now on the lookout to replace contractors that have pulled out and keep their multibillion-dollar project afloat amid escalating pressure from Buenos Aires.
Navitas, which operates the Sea Lion development alongside its partner, Rockhopper Exploration, has provided an update on Sea Lion contractor replacements and ongoing Falklands oil development progress amid Argentine sanctions, following the recent speech by Javier Milei, President of Argentina.
While clarifying that it is continuing to develop the project with the full support of the Falkland Islands government and the British government, the operator highlighted: “The partnership updates that the government of Argentina is continuing its efforts to impose sanctions on those involved in the Sea Lion project, as well as on other activities in the Falkland Islands.
“In this regard, and following a media report published by a contractor associated with the project stating that it will not perform work on the Sea Lion project and will not participate in oil exploration and production in the Falkland Islands area, the partnership updates that it is working to replace two breaching contractors and will continue to make adjustments to the project as required.”
The company does not expect any material adverse effect on the project at this stage. However, the firm also elaborates that such effect may materialize if the replacement of the two breaching contractors is delayed or unsuccessful, or if the implementation of necessary project adjustments is postponed or fails, as well as if additional contractors involved in the project announce their refraining from activity in the Falkland Islands area and adequate alternatives are not found.
The firm also points out that negative impacts on the project may also appear if there is a further escalation in the Argentine government's activities on the matter and additional regulatory and/or geopolitical changes occur that affect the legal and commercial assessments of the partnership and its advisors.
Following a final investment decision (FID) and financial close for the project, with a post-FID funding requirement of $1.8 billion through to first oil, while the total requirement to project completion is estimated at $2.1 billion, Navitas signed a memorandum of understanding (MOU) for an additional FPSO, OSX-1, to boost production capacity by a further 125,000 barrels of oil per day (bopd).
The first two development phases are planned to use the FPSO Aoka Mizu, which will have a production capacity of 55,000 barrels of oil per day. Based on the existing schedule, the drilling works are slated to begin in early 2027, with first oil from Phase 1 slated for H1 2028.