An Argentine initiative to find hydrocarbons in an Atlantic basin halfway to the British-ruled Falkland Islands has been inconclusive but the quest will continue with Brazilian, Chinese and Spanish interests taking part.

The first well drilled in the so-called Malvinas Basin to depths of more than 6,600 feet proved dry, the Argentine arm of Spanish giant YPF announced in a week dominated by news that Falklands' oil exploration and development could draw more investors after a successful find by Rockhopper Petroleum.

Industry analysts saw the YPF Argentina report as a blow to government plans to match the Falklands oil exploration program with a competing initiative encouraged by President Cristina Fernandez de Kirchner.

The Argentine oil industry has been in decline, with its energy surplus of 2006 valued at more than $5.5 billion gradually whittled down and then turned into deficit at the end of the decade. This year, Argentina will need to import substantial quantities of fuel, with its energy deficit calculated at $3 billion.

No early end to that deficit is in sight and even if the current exploration program results in new finds it will be years before Argentina sheds its dependence on imported fuel.

The unsuccessful well was shared by YPF Argentina, Brazil's state-run Petrobras and Pan American energy, an Argentine group co-owned by Chinese state oil interests.

YPF said the deep undersea drilling, which involved up to $150 million of investment by the three corporations, had produced "no evidence of hydrocarbons."

Argentina launched the so-called Malvinas basin oil quest last year in response to reports that the Falklands hydrocarbons operations were poised to produce moderate results. Officials indicated the operation was to emphasize Argentina's sovereignty over the waters and to reassert its claim of sovereignty over the Falklands, scene of a 1982 war with Britain that cost about 1,000 lives.

Britain beat back the invasion, which was ordered by a military junta that ruled Argentina at the time, secured a formal Argentine military surrender but soon found the claim revived after an elected administration succeeded the military in Buenos Aires.

YPF is going ahead with a 2010-14 Exploratory Development Program and is likely to follow up with more exploration bids. It said the first exploratory well was a "historic milestone" for the development of the industry and will help the corporations collect information and build on research obtained from a geological map.

YPF is using Stena Drillmax, a drill-ship with a dynamic positioning system capable of operating in depths of up to 10,000 feet below sea level. The drill ship is supplemented by three support vessels, two helicopters and more than 1,000 people from different companies contracted for the logistics of the operation.

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