Premier Oil wants 3rd party audit of Ratna oilfield

Vol 3, PW 24 (22 Dec 99) Exploration & Production

Premier Oil of the UK is resisting pressure by the Indian government to rush into the signing of a Production Sharing Contract (PSC) for the Ratna & R Series of oilfields.

This report learns that Premier has written a stern letter to the Indian oil ministry demanding an independent 3rd party engineering audit of existing infrastructure at the discovered oilfield, ahead of a resumption of negotiations on a PSC. Premier wants the cost of the audit (by an internationally recognised service contractor) to be offset against future production from Ratna.

Premiers letter was sent in the second week of December, shortly after talks with Indian officials in Delhi. Premier which is 25% owned by Petronas of Malaysia and 25% by Amerada Hess - has serious reservations about the quality of the Single Buoy Mooring (SBM), as well as the nearby Heera pipeline, which could evacuate oil and gas from Ratna.

Premier is also unhappy at the state of existing oil platforms, which it believes have deteriorated over time. A source in Delhi tells this report Premier will not pursue negotiations unless its demand for a 3rd party audit is met.

The company is resisting suggestions by Indian oil officials to first sign the PSC, followed by a joint internal audit (They want to put the cart before the horse). Premier also has serious misgivings about the model contract that the Indian government is using as the basis for the PSC talks, which it describes as a mixture of the Ravva PSC and the NELP model, with the worst aspects of both.

(They are trying to make the project fit into the PSC when they should be trying to make the PSC fit the project.) Premier is equally unimpressed by the Management Committee concept that Indian oil officials insist will oversee operations at Ratna.

This is described as inefficient, time-consuming and unworkable. Welcome to India!

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