The Falklands' bid to enter the big league of oil producers in the South Atlantic is drawing hedge funds to what promises to be a multibillion-dollar enterprise.

The Falkland, a British Overseas Territory, has been challenged by Argentina every step of the way from prospecting to commercial exploitation of subsea crude oil and possibly natural gas.

Argentina invaded the islands in 1982 but was repelled by Britain in a 74-day war that resulted in about 1,000 deaths.

Argentina's ruling military, which launched the attack, formally surrendered to Britain but lost its grip on political power soon after. The country's switch to elected government led to a revival of Buenos Aires claims on the islands, which Argentina calls its own.

Argentine claims have embittered diplomatic and trade ties between Britain and Argentina, Argentina and the Falklands and Argentina and any nation that trades with the British territory.

Argentina routinely blacklists shipping to and from the Falklands but, notwithstanding its punitive measures, international investor interest in Falklands oil continues to grow.

Falklands oil prospecting began under British umbrella, with most of early money drawn from London's alternative capital markets. Since last year, investor input has diversified, drawn North American and Asian interests under different guises and now appears poised for takeoff with hedge fund managers looking keen.

As oil and gas prices still show resilience, investor appetite for new energy fields remains ravenous.

Regulatory data indicated that hedge funds are buying unspecified stakes in the Falklands exploration program, operated mostly by firms based in Britain or quoted on London markets. The Falklands' own interests are spearheading moves to draw cash into the territory to speed the exploration and development process.

The regulatory data showed Lansdowne Partners, Odey Asset Management and Blackfish Capital are among funds accumulating part ownership of ventures in the Falklands' growing energy sector.

Falkland Oil and Gas Ltd., the territory's major energy company, has seen its equity value rise as the investors come in with more cash.

The FOGL exploration program is supplemented by firms that until recently were struggling to find new investors. Borders and Southern, Desire Petroleum and Rockhopper Exploration are among key players in the changing investment landscape.

France's EDF and U.S. Noble Energy earlier revealed their interest in developing the new oil and gas province despite its remoteness from both North America and Europe.

Desire Petroleum, another Falklands operator, this week announced changes to its production licenses following approval from the Falklands government.

Desire said its Production Licenses PL003, PL004 and PL005 will be grouped together with collective requirements for all three licenses. The licenses contain a successful extension, Sea Lion, and all other oil and gas discoveries.

Desire Petroleum also said it relinquished production licenses PL006 and PL007 because of poor results from the exploration program in the area. "A mature source rock is unproven in this area, and the only significant prospectivity in the license areas was tested by the 25/5-1 well which encountered only gas shows."

Desire Petroleum Chief Executive Officer Stephen Phipps thanked the Falklands government for the licensing review and reaffirmed commitment to continue exploring in the territory's South Atlantic waters.