What Sanctions Could Companies Operating in the Falkland Islands Face?

Argentina’s government is preparing tougher sanctions for companies that cooperate with oil exploration around the Falkland Islands, seeking to address what it considers a failure of the existing legal framework.

The planned changes to Law 26.659, passed unanimously on March 16, 2011, would accelerate the process and increase penalties for companies involved in exploration, along with their suppliers and investors. The law became known as the “Pino Solanas Law,” after filmmaker and politician Fernando “Pino” Solanas, who promoted it during Cristina Fernández de Kirchner’s first presidency.

Argentina has applied the law before, in 2013, 2021 and 2022, but the measures produced few practical consequences. In 2022, the government sanctioned Israeli oil company Navitas Petroleum, which operates in the Sea Lion project. Argentina’s Foreign Ministry condemned what it called “illegal operations,” while the Energy Secretariat declared the company’s activities on the Argentine Continental Shelf illegal and clandestine. Navitas was barred from operating in Argentine territory for 20 years, but continued working without apparent difficulty.

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The suppliers of these projects will receive the same penalties and prohibitions as the companies they collaborate with.

Authorities also sanctioned Chrysaor Holding Limited and Harbour Energy Plc in 2021, and Rockhopper in 2013. In 2015, the government took the sanctions against the companies to the Federal Court in Río Grande, Tierra del Fuego. The measures did not produce concrete results or discourage investment, according to the account.

The government now wants suppliers to face the same penalties and prohibitions as the companies they support. President Javier Milei said, “The suppliers of these projects will receive the same penalties and prohibitions as the companies they collaborate with.” He added, “The offenders will not be able to contract in Argentine territory, whether with the public or private sector; and, when appropriate, trials in absentia will be applied. We will also extend this regime to other activities on the islands that affect our natural resources.” The Legal and Technical Secretariat and the Foreign Ministry are preparing the details of the amendment.

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The offenders will not be able to contract in Argentine territory, whether with the public or private sector; and, when appropriate, trials in absentia will be applied. We will also extend this regime to other activities on the islands that affect our natural resources.