UPDATE 1-Borders says Falklands find is commercially viable
* Borders seeking partner before next drilling
* Development expected to cost $1.6 bln to $3.8 bln
* Shares rise 12.5 pct
LONDON, Jan 28 (Reuters) - British explorer Borders and Southern Petroleum on Monday said the development of its gas condensate discovery in the Falkland Islands is commercially viable.
Borders made its Darwin discovery in April off the remote islands, where exploration by British companies has inflamed tension with Argentina, and has been carrying out tests to determine the nature of its find.
Argentina, defeated by Britain in a military conflict over the islands' sovereignty in 1982, has attempted to make life difficult for British oil explorers, but its hostility has not deterred companies and the islands are set to start producing their first oil in 2017.
Any development by Borders would represent the islands' second hydrocarbon project.
Initial studies showed that developing the discovery of the condensate, a liquid form of gas that trades at a premium to natural gas, was both technically and commercially feasible, the company said on Monday, boosting its shares by 12.5 percent to 27.37 pence in early trading.
More drilling needs to be done before it will be able to proceed with any project, Borders said, adding that development will cost between $1.6 billion and $3.8 billion.
Borders estimates the size of its discovery at 190 million barrels. The company said it was seeking a partner prior to the next drilling period and has opened a data room for interested parties.
"We believe that the study confirms our view that Darwin is a commercial standalone development, viable with existing technology. In our view, Darwin will attract significant industry interest," Numis analyst Sanjeev Bahl said.
For an oil or gas development in the remote South Atlantic islands to make economic sense, large quantities need to be discovered.
Borders said that its next step is to prove the extent of recoverable volumes with appraisal drilling and to confirm the predicted flow rates with a well test.
A $1.6 billion-plus project for a company with a market capitalisation of about 130 million pounds ($205.5 million) is likely to need to be developed alongside a partner.
The appraisal drilling is seen as relatively low-risk, Borders said, and it is already looking to hire a drilling rig.
Oil found to the north of the Falklands by another British company, Rockhopper Exploration, is due to start pumping in four years time as part of a $1 billion partnership between the company and Premier Oil.
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