Energy Policy
Argentina has launched arbitration against the United Kingdom under the UN Convention on the Law of the Sea (UNCLOS), seeking to halt the Sea Lion oil project off the Falkland Islands (Malvinas).
The move shifts the target of a government offensive now nearly a month old. Until Monday, Buenos Aires had aimed its measures at the companies: sanctions proceedings under Law 26,659, which penalizes companies that explore for or produce hydrocarbons on the Argentine continental shelf without Argentine authorization; a criminal complaint; and a regulation that amended Argentina's Large Investment Incentive Regime (RIGI). The statement President Javier Milei signed on Monday addresses London directly, through a mechanism Argentina has already used successfully in another case.
According to the text released by the Office of the President, Milei instructed the Foreign Ministry and the government's legal teams to initiate the arbitration procedure set out in Annex VII of UNCLOS. The aim is to "prevent the illegitimate exploitation of hydrocarbon resources in the North Malvinas Basin through the project known as 'Sea Lion,'" as well as any other measure that could aggravate the situation, "in particular, the granting of new permits to exploit the natural resources of the Argentine Continental Shelf."
Argentina also gave the UK two weeks to take the steps needed to prevent those activities from starting or continuing. If London fails to comply, Argentina will ask the International Tribunal for the Law of the Sea (ITLOS) for provisional measures to protect its rights over the continental shelf. "If the United Kingdom does not stop the illegitimate exploitation within two weeks, we will go to the International Tribunal for the Law of the Sea," Milei wrote on X. Foreign Minister Pablo Quirno said the government had formally notified the UK of the start of the arbitration the same day.
The statement rests the claim on two UN General Assembly resolutions: Resolution 2065 (XX), which recognized the sovereignty dispute and urged both governments to negotiate, and Resolution 31/49, which called on them to refrain from unilateral changes while the process remains open. It also rejects the British response to Milei's address to the General Assembly and notes that the islanders' 2013 referendum was not internationally recognized.
The statement opened an aviation front as well. The government said it had detected operations by Thales UK Limited on the route between the islands and Punta Arenas, Chile, using a British-registered aircraft without Argentine authorization, and ordered sanctions proceedings, criminal complaints and diplomatic steps.
Why the Two-Week Deadline Matters
UNCLOS lets each state choose, by declaration, the forum for its disputes. Argentina named ITLOS, based in Hamburg, as its first choice. The UK chose the International Court of Justice (ICJ). When the parties' choices do not match, the Convention sends the case by default to a five-member arbitral tribunal under Annex VII.
The two-week deadline in the statement mirrors Article 290 of the Convention: while that tribunal is being constituted, if the parties do not agree on another forum for provisional measures within two weeks, the request can go directly to ITLOS.
Argentina has used this route before. In October 2012, it notified Ghana that it was starting Annex VII arbitration over the detention of the naval training ship ARA Libertad in the port of Tema. It asked ITLOS for provisional measures on Nov. 14, and on Dec. 15 the tribunal ordered the vessel's release.
According to the official hearing record, Argentina's agent was Susana Ruiz Cerutti, then legal adviser to the Foreign Ministry, and its counsel included Marcelo Kohen, then a professor at the Graduate Institute in Geneva.
The system has limits. Both countries have excluded delimitation disputes by declaration, and in 2015 an Annex VII tribunal hearing Mauritius's case against the UK over the Chagos Archipelago ruled 3–2 that it lacked jurisdiction to decide which state was the coastal state. It ruled unanimously, however, that the marine protected area London had created around the islands was incompatible with the Convention.
Four Groups Hold 15 Offshore Licenses
The latest production license register published by the islands' Department of Mineral Resources, with data as of March 4, lists 15 offshore areas covering 22,479 square kilometers, split among four groups. All shared the same expiry date: Dec. 31, 2026.
On Sept. 21, the Falklands government extended them for five years, with two more optional, and approved Navitas's entry into PL001, the block adjacent to Sea Lion. It is the same government that, as Shale24 first reported, approved a sovereign wealth fund financed with oil royalties, estimated at about $2 billion, with a public consultation planned for early 2027.
In the North Falkland Basin, Navitas Petroleum Development and Production, a subsidiary of Israel's Navitas Petroleum, operates with 65% of Sea Lion and the neighboring licenses PL003, PL004, PL005 and PL033. With PL001, its acreage totals 3,818 square kilometers. The partners took the final investment decision (FID) on Sea Lion in December 2025: $1.8 billion to first oil, planned for 2028, with peak output of about 50,000 bbl/d in the first phase. Navitas is also weighing a strategic partner for its 77-well plan.
Rockhopper Exploration, listed on London's AIM market, holds the remaining 35% of Sea Lion. It appears in the register through four vehicles: Rockhopper Exploration (Hydrocarbons) in PL032 and PL033; Desire Petroleum in PL003, PL004 and PL005, alongside Rockhopper Exploration (Oil) in the first two; and Falkland Oil and Gas, with 100% of PL011, PL012 and PL014 in the southern basin, covering 8,871 square kilometers.
Rockhopper knows international arbitration from the claimant's side. It is suing Italy at the International Centre for Settlement of Investment Disputes (ICSID) over the denial of the Ombrina Mare production license in the Adriatic. A 2022 award granted it €190 million; the award was annulled in 2025, and the case was resubmitted to a new tribunal constituted in March.
Borders & Southern Petroleum, also AIM-listed, holds 100% of PL018, PL019 and PL020, covering 9,790 square kilometers, the largest area under a single operator, as well as the Darwin East discovery area, 150 kilometers south of the islands in 2,000 meters of water. The company estimates Darwin holds 462 million barrels of recoverable liquids and is seeking a partner to appraise it.
The fourth licensee is JHI Falkland, a subsidiary of Canada's JHI Associates, which retains 35% of PL001.
The South Holds 83% of Licensed Acreage
The totals reveal an imbalance. The North Falkland Basin, home to the only development that has reached FID, accounts for 17% of the licensed area; the remaining 83% lies in the south, split between Falkland Oil and Gas and Borders & Southern. The islands' licensing rules, published by the same department, say Argentine oil companies are welcome to participate, but deem an award unlikely for groups with more than 49% Argentine ownership or with an operator registered in Argentina.
On the Sea Lion front, in mid-September federal judge Mariel Borruto in Rio Grande, Tierra del Fuego province, ordered Rockhopper and Navitas to refrain from advancing the project until an environmental assessment is completed. On Sept. 4, following Milei's nationally televised address, both companies had said they operate under licenses issued by the Falklands government and do not expect a material impact on the schedule, which places drilling in early 2027.