The Falkland Islands comprise some 340 islands, located approximately 480km from the nearest point in South America. The two largest islands are East and West Falkland. Stanley, the capital, lies on the eastern shore of East Falkland. The total land area covers approximately 12,000 sq km.

The islands have no indigenous population and the current population of approximately 3,000 is predominantly of British descent, some 2,000 of whom live in Stanley, the only town.

The Falkland Islands are an oversea territory of the UK and have considerable autonomy including in relation to fiscal matters. Her Majesty Queen Elizabeth II is the Head of State and is represented by the Governor who presides over the Government of the Falkland Islands and is advised in the exercise of his functions by an Executive Council of three of the eight elected Legislative Councillors and two ex-officio members (the Chief Executive and the Financial Secretary).

The democratically elected Legislative Council has legislative powers, but responsibility for defence and foreign affairs rests with the British Government.

The local administrative point of contact for the oil exploration industry is the Director of Minerals and Agriculture, a Falkland Islands Government official, based in Stanley.

The Falkland Islands economy has traditionally been based on agriculture and a growing offshore fishing industry and has an annual GDP of about £70 million. FOGL believes that the Falkland Islands has an infrastructure network capable of supporting at least the early phases of oil exploration.

The Falkland Islands lie at the western end of the Falkland Plateau. The islands are surrounded by four major sedimentary basins:

1. The Falkland Plateau Basin to the east

2. The South Falkland Basin to the south

3. The Malvinas Basin to the west, and;

4. The North Falkland Basin to the north.

The four basins appear to have extended initially as Triassic through earliest Cretaceous rifts associated with the break-up of Gondwanaland.

An early cretaceous (Valanginian) end to rifting was followed by thermal sag. There is evidence of Tertiary uplift, possibly coincident with Andean compression and the development of overthrusting along the plate boundary to the south of the Islands resulting from opening of the Scotia Sea.

FOGL's licence areas are located in the South and East Falkland Basins.

The South Falkland Basin demonstrates three main structural areas:

1. First, a narrow, rift-drift passive margin area, containing in excess of eight kilometres of Mesozoic and Cenozoic sediments and consisting of a faulted Late Jurassic to Valanginian rift sequence, a well defined Aptian to Albian marine transitional sequence of prograding shelf, shelf slope and basinal facies and a wedge of gently dipping Latest Cretaceous to Tertiary marginal sag facies.
   
   
2. Secondly, it has an area of tilted fault blocks, consisting of a faulted, broad saddle of Tertiary sediments, up to four kilometres thick.
   
   
3. Thirdly, the Burdwood Bank area, consists of an overthrusted, highly faulted area.