withdrew from the agreement; Falklands Oil and Gas Limited then signed an agreement with BHP Billiton to investigate the potential exploitation of oil reserves. Due to the difficult climatic conditions of the southern seas exploitation will be difficult, though economically viable; the continuing sovereignty dispute with Argentina is also hampering progress.
In February 2010 exploratory drilling for oil was begun by Desire Petroleum, but the results from the first test well were disappointing. Two months later, on 6 May 2010, Rockhopper Exploration announced that "it may have struck oil". Subsequent tests showed it to be a commercially viable find; an appraisal project was launched and on 14 September 2011 Rockhopper Exploration announced that plans were under way for oil production to commence in 2016, through the use of floating production storage and offloading (FPSO) technology
