UK Warns Argentina Over 'Economic Coercion' as Sea Lion Oil Project Faces Tribunal Challenge

The UK Government has accused Argentina of 'economic coercion' and pledged to protect businesses involved in the Sea Lion oil project after Buenos Aires asked an international tribunal to halt offshore hydrocarbon development near the Falkland Islands.

Foreign Office minister Uma Kumaran told the House of Commons on Tuesday, 13 October, that the UK would take part in the legal process but maintained that the project was lawful under licences issued by the Falkland Islands Government. Argentina argues that the development infringes its sovereign rights over the continental shelf in the North Falkland Basin.

Argentina notified the UK on 28 September that it was initiating arbitration under the United Nations Convention on the Law of the Sea (UNCLOS). On 13 October, it also requested provisional measures from the International Tribunal for the Law of the Sea, seeking to stop the project while the dispute proceeds.

UK Plans Legal Protection for Businesses

Kumaran said Argentina's arbitration notification was not a judgment and did not invalidate existing licences, change the islands' regulatory authority or require lawful hydrocarbon development to stop. She confirmed that the UK intended to participate in the proceedings but would not provide a running commentary while they were under way.

The Government also announced plans to use the Protection of Trading Interests legislation to shield UK businesses and individuals from Argentine measures seeking to regulate activity beyond Argentina's jurisdiction. Secondary legislation is expected to be brought forward, with the aim of bringing the protections into force before the end of 2026.

Officials are in regular contact with companies involved in the project and its supply chain. The Government has also said it will explain its position to international partners and other UK businesses that could be affected. The proposed measures would target Argentine actions applied beyond the country's jurisdiction, not lawful UK trade with Argentina.

Dispute Centres on Sea Lion Oilfield

The Sea Lion project is operated by Navitas Petroleum alongside London-listed Rockhopper Exploration. Argentina says the development is unauthorised and threatens its rights over the continental shelf. The UK rejects Argentina's sovereignty claim and maintains that the Falkland Islands Government has authority to regulate lawful economic activity in the territory.

President Javier Milei's government has proposed tougher penalties for companies and individuals involved in resource activity around the islands without Argentine authorisation. The proposed legislation would strengthen existing measures but has not yet been approved by Argentina's Congress, Reuters reported.

Navitas chief executive Ian Ramsey welcomed the UK's support, telling Reuters the company was grateful for the Government's commitment to defending the islands' right to lawful economic development. The companies have expressed confidence in the project's future, although Navitas has also said it is taking action to replace two contractors that would not work on the development.

Sovereignty Dispute Remains Unresolved

The Falkland Islands are administered by the UK but claimed by Argentina. The countries fought a war over the territory in 1982. The UK also cites a 2013 referendum in which 99.8 per cent of participating voters chose to retain the islands' status as a British Overseas Territory.

Argentina's request for provisional measures is not a tribunal ruling and has not, by itself, halted the project. The UK says it will defend the licences and the interests of islanders while taking part in the proceedings. Its proposed protections for businesses remain pending, with implementation targeted before the end of 2026.