Aides to President Cristina Fernandez de Kirchner said Argentine prospecting for hydrocarbons would begin in December -- a little more than a year after British companies started drilling for oil amid an international outcry from Buenos Aires, which contests British sovereignty over the Falklands, a British Overseas Territory.

Argentina invaded the Falklands in 1982 but was repulsed by Britain. The 74-day conflict cost more than 1,000 lives and led to a formal Argentine surrender that didn't prevent Argentina from reviving the sovereignty claim last year.

Analysts said Argentine plans for oil exploration in the South Atlantic waters could be interpreted in Argentina, Britain and the Falklands as an escalation because of continuing oil exploration by U.K.-listed companies licensed by the Falkland Islands government.

Argentina has leased a semi-submersible rig from Swedish company Stensa that will be used for exploratory drilling in an area described by officials in Buenos Aires as halfway between the Falkland Islands and Tierra del Fuego, an Argentine archipelago off the southernmost tip of the South American mainland, across the Strait of Magellan.

A consortium put together for the prospecting offers a flavor of the current oil politics of the Falklands, as it includes YPF-Repsol, a Spanish oil and gas company with operations in 29 countries but major assets in Argentina, Argentina's Pan American Energy and Brazil's Petrobras.

Industry sources said when implemented the oil drilling operation would be the southern-most oil exploratory operation in Argentina's history.

The initiative was interpreted by industry analysts as Argentina's answer to the exploratory round in the Falklands' waters from the British side and a follow-up to Argentina's claims of sovereignty over the area.

As retaliation against British drilling in the Falklands Basin, Argentina announced punitive sanctions against vessels bound for the islands but shipping industry sources argued the measures could hurt Argentina more than the Falklands.

Britain has rejected Argentine claims the Falklands or the waters are disputed territory.

Five U.K.-listed companies have drilled or announced plans to drill in Falklands' waters.

Before Argentine naval reinforcements in the area, Britain also built up its naval presence in the South Atlantic region, explaining its action as a routine exercise.

Argentina has justified its military reinforcements as part of an overall national strategy that sees the South Atlantic as Argentina's "soft belly." But Buenos Aires' pronouncements of British "neo-colonialism" and "occupation" of the Falklands have led to London viewing developments as an unwanted military escalation.

earlier related report
Levant energy stakes keep getting higher
Tel Aviv, Israel (UPI) Sep 15, 2010 - The energy stakes in the volatile eastern Mediterranean keep getting higher.

U.S. explorer Noble Energy of Houston says the reputedly vast Leviathan natural gas field it found off Israel in recent months could also contain up to 4.3 billion barrels of oil.

If that pans out, Israel could have enough oil to keep it running for decades, as well as enough gas from Leviathan and two smaller fields, Tamar and Dalit, to meet its own requirements for 50 years.

But the new oil claim has sharpened tension with neighboring Lebanon, where Israel's sworn enemy, Hezbollah, reportedly has up to 45,000 missiles and rockets aimed at the Jewish state.

Lebanon claims the gas fields extend northward into its waters and, on Aug. 17, parliament approved a fast-tracked law to allow offshore exploration, setting the stage for an energy battle that is sure to exacerbate the conflict with Israel.

The law left many aspects of offshore exploration unaddressed, such as who would regulate such projects, how the income from any oil or gas fields discovered would be managed and who would control it.

Lebanon conducted seismic surveys in 2006-07 and these indicated that there could be significant gas reserves off the coast, a prospect vastly heightened by the deep-water strikes off Israel.

A study by the U.S. Geological Survey published in March estimated that 122 trillion cubic feet of recoverable natural gas could lie off the coastlines of Syria, Lebanon, Israel and the Palestinian-ruled Gaza Strip.

The Lebanese have alleged that Israel has plundered its river water over the years, particularly between 1978 and 2000 when Israeli forces controlled or occupied south Lebanon.

Political squabbling by Lebanon's fractious leaders, deeply divided by religion and sect, had prevented any serious attempt to delineate the state's maritime boundaries or reach a consensus on exploration and that is likely to continue as domestic sectarian tensions escalate amid the worsening regional crisis.

The Lebanese, Hezbollah in particular, have vowed to prevent Israeli encroachment on what are deemed Lebanon's territorial waters.

Resource-poor Israel in turn has said it "will not hesitate to use force" if necessary to protect its new-found energy wealth that will transform its economy for decades to come.

The big prize for Israel is the Leviathan field 50 miles west of Haifa, the country's main port and naval base. Noble Energy estimates it contains 16 trillion cubic feet of gas.

The nearby Tamar field has proven reserves of 8 tcf and is expected to start delivering in 2012. There are plans to build a major terminal near Haifa.

All told, the gas finds announced by Noble Energy and its Israeli partner, the Delek Group, could eventually total 24 tcf with a value of $300 billion or more.

But even that could represent only a small part of the gas that lies beneath the seabed in the eastern Mediterranean.

The political ramifications of the discovery of the potential offshore energy bonanza are likely to fuel the escalating dispute.

Lebanon is still technically at war with Israel and there has been no sign of a shift toward a peace settlement that would clearly benefit both resource-poor nations.

Indeed, Hezbollah, the strongest military force in Lebanon, has proclaimed the country's need for its military might "has doubled … in light of Israeli threats to steal Lebanon's oil wealth."

The Iranian-backed Shiite movement has been resisting efforts by the Western-backed government of Prime Minister Saad Hariri to surrender its weapons and merge with the national army and the energy spat has added weight to Hezbollah's refusal to compromise.

The oil and gas reserves have gone undiscovered for so long because Western companies didn't want to antagonize Arab producers like Saudi Arabia, Iraq and Kuwait by working with Israel.

But now that the secret's out, Israel and Lebanon seem set to duke it out.

The dispute may extend to Cyprus, which lies to the north close to the Turkish coast. The government in the southern Greek Cypriot part of the divided island is seeking clarification on whether the gas fields lie in its waters as well.

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