Falkland Islands tensions erupt as £4bn oil and gas deal extended despite Labour promises

The government has agreed to extend licences for an oil company, which could bring it into conflict with the Labour government.

Some 800 million barrels of oil are believed to be contained in the , which lies 150 miles north of the South Atlantic archipelago.

Rockhopper Exploration has been granted licences to drill for the oil that could earn the .

Following recent discussions with the Government, the company announced its licences had been extended to December 31 2026.

Sam Moody, CEO of Rockhopper, commented: "We are pleased to have extended the licenses, enabling us to continue progressing our work in the Falkland Islands."

The company believes the basin could eventually yield as much as 1.2 billion barrels after another field was discovered nearby.

However, the islanders' determination to drill for oil could bring it into direct conflict with the Labour government.

Labour plans to phase out fossil fuels and transition the UK towards clean energy.

Energy Secretary Ed Miliband placed a block on all new oil and gas licences in July, days after the party came to power.

And in its , Labour said the climate and nature crisis was the greatest long-term global challenge the country faced.

The UK's Foreign Secretary David Lammy reinforced that commitment recently, when he delivered his first major foreign policy speech at Kew Gardens in September.

The Labour politician said that action on the climate and nature crisis will be central to all that the Foreign Office does.

He said that the environmental crisis "is not some discrete policy area, divorced from geopolitics, conflict and insecurity".

He added: "The threat may not feel as urgent as a terrorist or an imperialist autocrat. But it is more fundamental."

The Sea Lion field is predicted to generate £4 billion for the 3,700 Falklanders over the next 35 years, equivalent to around £1m per islander.

It will also provide huge opportunities for UK firms, according to the island's government.