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The 2012 summer Olympic Games in London are just around the corner and a new sporting event will be featured this time around…
It’s called the “oil sprint” and involves all the usual suspects and a few new ones…
Just in case you somehow forgot that the world still runs on oil, or if the Middle East poker game was starting to bore you…
A little drama is playing out in the Southern Hemisphere, in Europe, and in Asia that ought to hold your interest.
And even though it didn’t make the headline news here in the US, it did overseas…
It’s going to be really worth watching, and the drama is just beginning.
Take a hike, Spain
You see, Argentina has just nationalized YPF, the oil company that was majority owned by the Spanish firm Repsol, which it bought from Argentina in 1999.
Argentine president Kirchner announced the nationalization of the oil company, and Repsol is demanding $10.5 billion.
Argentina’s response? Pound sand.
Okay, so there’s a tiff between Argentina and Spain, so what?
What’s Spain gonna do about it, threaten Buenos Aires with a new Julio Iglesias tour?
Not quite; it gets just a little juicier than that.
The ‘so what’ of the whole thing is that it involves several moving pieces…
One of the pieces is oil—perhaps lots of it—as well as disputed territory.
Argentina’s play in the whole matter is starting to look very shrewd and very dangerous…
The oil that is involved in this love triangle happens to be located just offshore the Falkland Islands…which, for the moment, are still British territory…
A fact that Argentina has contested before and is doing so again, to a lesser extent…so far.
That is another piece of the puzzle.
The British navy, which happens to be in the Falklands right now, is there to protect British interests there and those interests that lie beneath the islands.
Now, for the bonus round. Guess who’s backing Spain in this tempest?
That’s right, Great Britain…and, for what it’s worth, so is the European Union.
The EU has pledged its “economic and diplomatic support” for Spain, which means calling Argentina some really bad names in private conversations, but otherwise, lacks any real heft.
And Spain, as you probably know, is in the midst of a rather public decline—who isn’t?—with a huge and humiliating bail out in their future by the EU, the European Central Bank, the Germans, the IMF, or whomever else happens to have the cash on hand to do so.
More on that later…
Long story short, the Spanish are not in a very good mood at the moment.
But then, Argentina doesn’t really care.
And speaking of moments, why did Argentina pick this one to nationalize YPF?
Hint: Their oil production has been falling the past several years as their existing oil fields dry up…
And then of course, the Brits just had to drag an oil platform all the way from the Scottish coast to prove to the world that they could do it…but also to drill for oil near the Falkland Islands...
Because of the estimated 60 billion barrels of the dark sticky stuff that some experts say are located there.
Oil and War
This brings us to the real possibility of a sequel to that early ‘80s classic, the Falkland Islands War.
But Falkland Islands War II won’t be about a few hundred British subjects on a windswept rock in the South Atlantic…
It will be all about the oil.
So now the players have chosen sides, right? It’s Argentina vs. the UK, along with Spanish marching band and the EU cheerleaders…
Now, no one has any illusions that Argentina is going to forcibly take the Falklands—or the Malvinas as they’re known in Argentina—from the British navy.
But this is where things get really interesting…
Argentina is openly seeking a JV partner in their newly nationalized oil company, someone who may just be able to help them with their Falkland/British problem.
As it turns out, they have an interested suitor who is rather cashed up and looking for oil wherever they may find it…
And who might that be?
The very same cashed up suitor the Eurozone heads are hoping to partner with to lift them out of their crisis…
And the very same guys that Repsol was in talks with to sell their majority stake to for $10.5 billion…
Yep, the Chinese.
That’s another huge piece to a puzzle that is looking more dangerous with each passing day.
The Chinese have since walked out of their talks with Spain and are now talking to Argentina.
Meanwhile, a top Chinese Communist party official is in London explaining to British Prime Minister Cameron why a prominent British businessman was offed in a hotel room by the wife of a man who, until this month, was to become the leader of all of China later this year.
Pretty heady stuff, no?
Add in the very recent and real Chinese threat of war against Vietnam over—what else—disputed islands with oil beneath them, and you get a picture of a China desperate to secure resources, a Eurozone desperate for cash, an Argentina looking to challenge the status quo for all the cash they can get, and the UK desperate to hold onto whatever they can while they still have the navy to do it with.
Summer games, indeed.
And those are…The Gorrie Details.