Argentina accuses Noble Energy of illegally operating in Falkland Islands

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Petrobras has been part of Brazil's emergence as an economic world power since it was created in 1953 to preside over the country's oil exploration and production. The state-owned company witnessed massive growth in the 1970s after the discovery of deepwater oilfields in the Campos Basin.


The corporation, which is the largest in South America and rivaled Exxon Mobil in size for a time, held on to that monopoly for almost 33 years. But in the 1990's, Brazil's economy was flailing, so the government moved to radically restructure the country's economy and open up several industries to privitization. President Fernando Henrique Cardoso deepend the privitization program, opening the oil industry and Petrobras to private competition.


Today the company is struggling against increased competition from prodcuers targeting U.S. shale plays. The company is also the subject of a corruption scandal in which former Petrobras executive Paulo Roberto Costa was arrested on money laundering charges and then told investigators that more than a dozen politicians were involved in an expansive kickback scheme for Petrobras contracts.


After oil was discovered in Mexico around 1900, Mexican producers faced foreign competition from mostly American companies. In 1917, Mexico changed its constitution to give the government property rights over its natural resources, and later, foreign companies on Mexican soil were given land titles lasting just 50 years.


In 1938, Mexican President Lazaro Cardenas moved to nationalize all oil resources and facilities after a strike by workers of foreign-owned oil companies. The United States and some European countries reacted by embargoing all imports of Mexican oil. However, American President Franklin D. Roosevelt lifted the embargo soon after in the face of the country's increasing need for oil during World War II. Mexico eventually paid foreign companies $24 million in compensation for nationalization.


But nationalizing the industry led to Mexico losing the technical expertise that foreign companies brought to the countries oil fields. By the late 2000s, only a fraction of country had been explored for reserves. Increasingly, the Mexican government discovered that Petroleos Mexicanos, the nation's state-owned oil company, could not fully exploit the country's oil reserves on its own despite being one of the largest companies in the Western Hemisphere.


In Aug. 2013, Mexican President Enrique Pena Nieto signed a bill opening the country's oil industry to foreign competition for the first time in 76 years into law.


Within a few months, Pemex had signed cooperation agreements to share technology with companies like Exxon Mobil and Italy's ENI.


The creation of a nationalized oil industry in Venezuela is also tied to the founding of the Organization of Petroleum Exporting Countries. In 1960, Venezuela, Saudi Arabia, Iran, Kuwait and Iraq met in Bagdhad to create the organization that would help the countries to control international oil prices. In the next decade, several of these countries moved to nationalize their oil assets.


In 1971, President Rafael Caldera (right, pictured with then president-elect Hugo Chavez) signed the bill that allowed for the nationalization of the country's natural gas industry. By 1976, Venezuela created the state-owned Petroleos de Venezuela S.A. and seized the assets of foreign oil companies in the country.


Venezuela's oil industry entered a period of turmoil in the early 2000s at the same time that President Hugo Chavez attempted to deepen the nationalization program.


An oil strike in Venezuela in December 2002 led to a spike in interational oil prices. Tensions between Chavez and PDVSA arose when the president tried to institute revenue quotas, like requiring the company to invest 10 percent of its budget in social programs. Chavez referred to the program of revenue redistribution and tax reform as a re-nationalization.


Amid a glut of oil pouring out of the United States starting in 2009, Venezuela's oil industry has struggled as the price of oil has dropped. In October, the country scrapped a plan to sell its U.S. refining arm, Citgo Petroleum Corp., as its profit margins have plummeted.


In 2006, Bolivia's newly elected president, Evo Morales, used the military to seize oil and gas fields around the country, motivated by a nationalist movement that was spurred by skyrocketing gas prices.


A taxi leaves a Yacimientos Petroliferos Fiscales Bolivianos (YPFB) empty hydrocarbons deposit in a poor neighborhood of La Paz, Bolivia on Monday, Aug. 14, 2006. Bolivia's ambitious plans to nationalize its oil and gas industry have faltered following the announcement that Yacimientos Petroliferos Fiscales Bolivianos (YPFB) would undergo a complete reorganization, raising doubts about the national petroleum company's ability to manage the country's extensive natural gas reserves.(AP Photo/Dado Galdieri)


In 1949, President Juan Pern singed a bill granting control to YPF over all of Argentina's oil industry. But turmoil in the inudstry over the next decade led to the revocation of that bill 1956, then a renationalization by 1958.


In 1993, YPF was privatized and sold to Spainish oil company Repsol. But in 2012, President Cristina Fernndez de Kirchner introduced a bill that would partly renationalize the company, transferring a 51 percent majority ownership to the government.

Argentina launched fresh attacks against Noble Energy this week, accusing the Houston-based oil company and others of operating illegally in the Falkland Islands.

It’s the latest tactic by the government, which claims sovereignty over the Falkland Islands, to stop oil exploration and production in the region. Argentina has long argued that energy companies are hunting for crude offshore the Falklands without its permission. Earlier this year, the government filed criminal charges against Noble and other oil companies in the region, which Noble dismissed as having no merit.

Noble Energy has brushed off the latest accusations, maintaining that its concession contracts are with the Falkland Islands Government, not Argentina.

An Argentine federal judge has ordered the seizure of $156.4 million in assets from oil companies operating in the Falklands, and called for ships to be impounded and other property to be confiscated, according to reports in Latin American media.

In a resolution published this week, Argentina’s energy ministry said it warned the foreign ministry and prosecutors that it believes Noble’s operations are illegal so they can take whatever legal actions they deem necessary, according to media reports from the region.

Related: Noble Energy doubles down in Falkland Islands

Noble Energy in April announced that it had scooped up additional acres offshore the Falkland Islands, despite opposition from the Argentine government.

The company is exploring two prospects in the region: the Rhea in the North Basin, estimated to contain more than 250 million barrels of oil equivalent, and the Humpback in the South Basin, which combined with a cluster of other prospects in the sub-basin, could hold as much as 1 billion barrels of oil equivalent.

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