Premier ready to offer 10% Ratna stake to ONGC

Vol 8, PW 14 (06 Oct 04) Exploration & Production

Contrary to recent media reports, Premier Oil of the UK may be ready to pass its 10% stake in the Ratna and R Series oilfields offshore Mumbai to ONGC.

Premier's willingness to dispense with its stake in Ratna should come as nosurprise to industry watchers. When the field was awarded to a consortium of Premier Oil (10%), Essar Oil (50%) and ONGC (40%) in 1996, Premier was embarking on a high-profile strategy to acquire international development projects.

But today, the UK independent like Cairn Energy - feels it is better suited to high risk, high reward exploration programmes where it has the core skills in house.In line with this new strategy, Premier in 2002 sold its entire interest in the $700m Yetagun development offshore Myanmar to Petronas and in the same year transferred 15% of its stake in the Natuna Sea development offshore Indonesia to Petronas and 23% to Amerada Hess.

The company's focus hasswitchedmainly to exploration, we learn.Capital intensive development projects like Ratna no longer fit Premiers global strategy.

This year Premier is drilling 20 exploration wellsacross its global assets, including one in India, where it operates two exploration blocks in Assam: AAP-ON-94/1and CR-ON-90/1. For a company the size of Premier, the level ofinvestment in its exploration programme is substantial, and supports its claim that it is now firmly focused on exploration, not development.

Premier and ONGC haven't yet met for formal talks but this report believes the UK explorer would welcome an approach by ONGC chief Subir Raha.In recent days Raha has been making very public his intention to get the fields back at any cost, most recently at a press conference on 29th September to highlight the companys end of year results.

Getting Premier to sell its stake in Ratnamight be easy for Raha. Getting Essar to agree won't be.

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