For two months a sky-blue tug boat has been puttering across the Atlantic dragging a 14,400-tonne oil rig.

It has been slow going — about 6mph — but this week the odyssey will end when it delivers the rig, called Ocean Guardian, to its destination just north of the Falkland Islands.

It will be a big occasion. Twelve years have passed since oil companies last went prospecting round the Falklands, 300 miles off the coast of Argentina.

All but one of the half-dozen wells that were drilled by Shell and others in the 1998 campaign showed signs of oil. In those days, though, the oil price was hovering around $10 a barrel, making it uneconomic to develop fields in such a remote location.

There was cheaper oil elsewhere. Talk of production also angered Argentina, which disputes Britain’s ownership of the islands, with protesters mobbing Shell forecourts.

More than a decade on, several things have changed. The oil price is seven times what it was — Brent crude closed at $70.55 on Friday. Drilling technology has developed in leaps and bounds. And it is becoming harder to find fresh reserves, pushing explorers into new regions in the hope that there may yet be another big find or two (see panel on right).

In the past few months investors have handed over more than £250m to four London-listed firms that are trying their luck in the Falklands.

“This is one of the most anticipated drilling campaigns of the year,” said Paul Wheeler, managing director at Jefferies International, the investment bank. “Last time they tried there were five wells that had oil or gas shows. The basins around the Falklands merit further exploration and this will be a fascinating few months.”

The region is one of a handful that has come back in vogue after years of being ignored. Later this year Cairn Energy, the FTSE 100 company, will drill the first new wells in more than a decade in the icy waters off the coast of Greenland.

The industry is littered with stories of companies that have been ruined or made through exploration. Even by those standards the Falklands is an extraordinary bet.

None of the companies — Borders & Southern, Desire Petroleum, Rockhopper Exploration and Falkland Oil and Gas — that raised the fresh funds has any other assets. For them, it’s the Falklands or bust.

“We know there is oil and gas there. We just don’t know if it’s commercial,” said an insider at one company. “If the holes come up dry, there will be little residual value left.”

They are not going in blind. In the past few years the companies have built up detailed 3D images of the earth’s crust by using high-tech seismic imaging that has imrpoved markedly since the 1990s.

Some big names are involved. BHP Billiton is the lead developer on Falkland Oil and Gas’s main block. Petrobras, Brazil’s state-owned giant, and Repsol, the Spanish group, are partners on another in the south. These companies could drill up to 10 wells over the next 18 months.

Geologically, the northern Falklands basin is similar to that under Uganda’s Lake Albert, where a multi-billion-pound bidding war has broken out for rights to develop recent finds. Analysts say the northern Falklands basin could hold between 2 billion and 5 billion barrels.

Desire will use the Ocean Guardian to drill the first well this month, followed by Rockhopper. BHP and Falkland Oil and Gas are then expected to take the rig to the southern basin before handing it to Rockhopper for another prospect in the north.

The southern basin has a different geological structure. Because it is in deeper water, a bigger, more expensive rig will be needed. Borders & Southern, which has its acreage there, is in talks to hire one.

Whether the Falklands is sitting on potential billions or some unexploitable pockets of oil and gas will become more clear in the months ahead.

What is certain is that any significant find would drastically alter the economic and social make-up of the islands, where Britain retains a heavy military presence.

As in 1998, oil has rekindled the long-standing dispute between Argentina and Britain that culminated in the Falklands war in 1982.

Buenos Aires’s foreign minister last week fired off a letter to the British embassy protesting against exploration “in areas of the Argentine continental shelf subject to illegitimate British occupation”.

Tim Bushell, chief executive of Falkland Oil and Gas, said he didn’t expect what for now remains a low-level war of words to hinder exploration. If a significant find is made, however, that could change.

“If oil is found then the governments will have to find a workable solution,” said Bushell. “We’ll let the politicians handle that.”

David Hudd, chairman of Falkland Island Holdings, a small conglomerate that serves the needs of the 3,000-strong population — with interests from retailing to squid fishing and a stake in Falkland Oil and Gas — said the Argentine reaction was “a replay of their constant effort to raise the Falklands ante at every opportunity. This is not the way to win the hearts and minds of the people,” he said.

Business chiefs’ warning that output will peak by 2015

Business leaders will this week sound the alarm over an energy crisis that will occur when oil reserves start to decline, writes Tricia Holly Davis.

The Peak Oil Group was set up 18 months ago by such leading figures as Sir Richard Branson, the Virgin Group founder, and Ian Marchant, chief executive of Scottish and Southern, the power company.

In a report on Wednesday the group will warn that global oil production, which has grown for decades, will peak as early as 2015. The consequences could be dramatic.

“We are heading for a steep decline in oil production in a few years’ time and we are completely unprepared,” said Jeremy Leggett, chairman of Solarcentury, a solar-panel installer. “Most people just assume this is not a scenario that can happen, but it can, and it will, unless we do something now.”

The report predicts the shrinking cushion between demand and supply will push the oil price above $100 a barrel. The soaring price of crude in 2008 — when it hit $147 a barrel — helped to push the weakened global economy into full-blown recession.

The group will demand greater incentives to move to low-carbon energy generation and policies to encourage energy efficiency. “Unless we acknowledge a shock may come, then a shock will come,” said Marchant. “The unit cost of energy will go up. The only way to offset it is to bring overall consumption down.”

Predictions about the end of oil have been popping up for decades. So far they have all been wrong. However, after 250 years of economic development, we are near to exhausting the earth’s fossil-fuel stores, said Marchant.

According to the report, low-cost oil supplies — that is, under $25 a barrel — ended in early 2005 and are unlikely to return. The global supply of oil is now expected to peak at about 92m barrels a day, the capacity that will be in place by the end of this year or early next year.

Global consumption at present is about 84m barrels a day.