Premier Oil "familiar" with Assam type terrain

Vol 6, PW 15 (25 Sep 02) Exploration & Production

PREMIERS DECISION TO bid for AA-ONN-2001/1 is linked to its plans for adjacent block CR-ON-90/1, held by operator Essar Oil with 55%, Tullow Oil with 25% and Hindustan Oil Exploration Company with 20%.

Essar has lost interest in this block and has signed an agreement with Premier to sell most of its stake and operatorship. Premier first revealed its wish to farm-in to oil minister Ram Naik and other officials during the NELP-III roadshow in London and is now preparing the relevant documentation.

"Once this is ready an application will be made to assign the stake and operatorship to Premier." Essar wants to quit CR-ON-90/1 because it finds the block "technically challenging." Premier by contrast is "eager to get in with a large chunk" because it's familiar with similar terrain elsewhere. A source further reveals that Essar wants to exit the northeast and focus on its assets in western India.

HOEC and Tullow Oil also want to quit CR-ON-90/1. We understand HOEC has already withdrawn from the block and it's application to assign its stake to Essar is pending with government since long.

Tullow wants to sell its 25% stake to Premier. Tullow is "uncomfortable" working on CR-ON-90/1 because of the difficult terrain and local rebels.

"Northeast India is no longer a focus for Tullow," reveals a source. "Working in India is difficult enough without having to deal with an insurgency!" When HOEC's request is granted, the equity structure should see Essar with 75% and Tullow with 25%.

Out of its 75% Essar wants to sell 59% to Premier and retain the balance. When all the financial re-engineering is complete, the equity structure should see operator Premier with 84% and Essar with 16%.