SLB rules out Falkland Islands oil tenders as Argentina tightens sanctions on global suppliers

SLB, one of the world’s largest oilfield services companies, has ruled out participating in tenders connected with hydrocarbon projects around the Falkland Islands (Islas Malvinas), becoming one of the first international suppliers to respond publicly to Argentina’s new enforcement measures.

The company, formerly known as Schlumberger, said it is not currently involved in bidding processes for oil and gas services in the islands or surrounding maritime areas and has no plans to participate in them.

SLB linked its position directly to Decree 868/2026, issued by the Argentine government to accelerate the application of existing legislation against companies involved in hydrocarbon activities that have not been authorised by Buenos Aires.

The announcement does not indicate that SLB has withdrawn from an awarded contract or cancelled existing work on the Sea Lion oil development, the project currently at the centre of the dispute. Instead, it represents a preventive compliance decision intended to remove uncertainty over the company’s position.

That distinction matters. SLB’s statement does not stop the project, but it shows how Argentina is attempting to influence its supply chain by forcing global contractors to choose between opportunities near the disputed islands and continued access to the Argentine energy market.

Vaca Muerta increases Argentina’s leverage

SLB operates in more than 100 countries and provides drilling, reservoir evaluation, well-completion, production, subsea and digital services to the energy industry.

Its presence in Argentina is concentrated partly around Vaca Muerta, where international service companies support the expansion of unconventional oil and gas production.

In March 2026, SLB and state-controlled energy company YPF announced the group’s incorporation into the Instituto Vaca Muerta, an initiative designed to develop technical skills for large-scale shale operations. The agreement followed a visit by SLB chief executive Olivier Le Peuch and YPF president Horacio Marín to Loma Campana.

That commercial position helps explain the significance of the new declaration. For suppliers with substantial operations in Argentina, the cost of participating in projects around the islands may extend beyond a single offshore contract.

Decree 868 makes compliance with Law 26,659 part of the process for obtaining hydrocarbon permits, concessions, authorisations and licences in Argentina. Applicants must submit a sworn declaration confirming that they—and entities with direct or indirect ownership links—do not participate and will not participate in activities prohibited by the legislation.

The same condition applies to companies seeking access to the Large Investment Incentive Regime, known as RIGI, which offers long-term tax, customs and foreign-exchange benefits for qualifying projects.

Argentina’s practical leverage therefore lies in its ability to restrict access to its own energy resources, contracts and investment incentives. This is particularly relevant as Vaca Muerta attracts capital for upstream production, pipelines, export terminals and liquefied natural gas infrastructure.

Faster administrative proceedings

The decree appoints Argentina’s Foreign Ministry as the authority responsible for enforcing Law 26,659, aligning the sanctions system more closely with the country’s diplomatic position on the islands.

Government agencies must report possible violations within five working days of identifying them. Once formally notified, an alleged offender has ten administrative working days to respond and submit evidence. The enforcement authority must then issue a decision within another ten working days, unless an evidentiary phase extends the process.

Under the existing law, companies found to have breached the restrictions can be barred from operating in Argentina for between five and 20 years. Hydrocarbon concessions held in the country may also be revoked.

The rules cover more than field operators. They prohibit companies active or authorised in Argentina—and their shareholders—from participating directly or indirectly in unauthorised developments or providing financial, logistical, technical, commercial, consulting or advisory services to them.

This wider scope places oilfield contractors, equipment suppliers, financial institutions, insurers and logistics companies within the potential risk perimeter.

SLB’s response indicates that international service providers with established Argentine operations are assessing this exposure before accepting work connected with the disputed area.

Sea Lion remains on schedule

The immediate focus is Sea Lion, an offshore oilfield located approximately 220 kilometres north of the islands. The project is operated by Navitas Petroleum, while London-listed Rockhopper Exploration holds a 35% interest.

The partners approved the first development phase in December 2025. Its total projected cost is approximately €1.8 billion, including contingencies and financing expenses.

The plan targets the recovery of around 170 million barrels during the first phase, with peak production estimated at approximately 50,000 barrels per day. First oil is scheduled for 2028.

Navitas and Rockhopper maintain that their petroleum licences are valid and have said Argentina’s latest measures are not expected to have a material effect on the project’s development schedule.

Argentina rejects those licences because they were not issued by its authorities. The islands are administered by the United Kingdom and claimed by Argentina, with their sovereignty remaining the subject of a long-running dispute between the two countries.

The disagreement creates two parallel legal frameworks. Contractors may regard their activities as lawful under licences issued by the island authorities, while simultaneously facing administrative and commercial consequences in Argentina.

A signal to the wider supply chain

SLB’s announcement is significant less for its immediate effect on Sea Lion than for the precedent it may establish among international suppliers.

Developing an offshore field requires drilling contractors, subsea engineering companies, equipment manufacturers, software providers, insurers, banks and logistics operators. Many of those businesses also have interests elsewhere in Argentina or may want to participate in future Vaca Muerta and infrastructure projects.

The new regime increases the need for companies to examine ownership structures, subsidiaries, partnerships and customer relationships before entering contracts connected with the islands.

It may also encourage more suppliers to issue public declarations similar to SLB’s, particularly if maintaining silence creates uncertainty over their eligibility for Argentine permits or RIGI benefits.

For Buenos Aires, the corporate response provides an early indication that access to the Argentine market can be used as a deterrent even when the country cannot directly control activity in the disputed waters.

For Sea Lion’s developers, the challenge will be securing the equipment, technology and financing required to meet the project’s timetable without relying on companies unwilling to risk their operations in Argentina.

SLB’s decision will not determine whether Sea Lion proceeds. It does, however, show that Argentina’s enforcement strategy is beginning to influence the commercial calculations of the global energy supply chain.