Premier Oil to retain its 10% stake in Ratna oilfield

Vol 8, PW 23 (23 Feb 05) Exploration & Production

Premier Oil has confirmed that it intends to retain its 10% stake as operator of the Ratna and R Series oilfields.

We hear from the corridors of ONGC that Chairman Subir Raha has received a letter from Premier CEO Charles Jamieson confirming the companys intentions. From the ministry we hear that on 18th February Premier went a step further and sent a letter that landed on the desk of section officer SK Upadhyay formally confirming its intention to stay in and to be the operator.

Earlier reports, carried by us among others, suggested Premier was ready to offer its 10% stake to ONGC, possibly in exchange for exploration acreage in the northeast under their joint cooperation agreement. One industry observer believes Premiers move is driven by a belief that the PSC would be signed quicker if it stays in the block whereas exiting would spark another round of tedious paperwork and almost certain objections from the principal shareholder Essar Oil.

Another wag believes Premiers move is driven by a strategy re-think and the obvious attractions of $40 oil. What is clear is that a signed PSC for this field is still nowhere in sight and that approximately 100m barrels of recoverable reserves with potential production of over 20,000 barrels per day for 18-20 years is going unexploited when it could be making a significant contribution to the countrys domestic oil production.

Despite numerous false alarms, the only significant development in this never-ending saga happened on 9th April 2001 when Essar (50%), Premier (10%) and ONGC (40%) initialled the PSC. Since then nothing has moved except vast quantities of hot air and ministry paper.

Thats not how it was envisaged on 12th March 1996 when Essar and Premier celebrated receipt of a Letter of Intent for Ratna from the government following the second licensing round for discovered fields, which closed in March 1994 11 years ago!