Premier Oil Falklands’ deal has full support from Foreign Office and markets
Britain's Premier Oil which reached a 1 billion dollars deal to farm in and develop Rockhopper Exploration oil and gas discoveries in the Falkland Islands took advice from the Foreign Office before closing the deal, according to UK media.
Sources close to Premier confirmed that the company, which also holds stakes in the UK North Sea and Africa, had consulted the British government before closing the deal which involves developing oil and gas resources offshore the Falklands which are claimed by neighboring Argentina.
“Obviously there is an element of political risk here but there is political risk everywhere including the North Sea where the tax regime keeps changing. The UK government clearly backs the Falklands government and we think the Argentines are saber-rattling for internal political reasons. We are not going to see military action,” said the source.
Premier said it would partner Rockhopper paying an initial 231 million dollars in cash as well as providing around 770 million to help build infrastructure for the development of the Sea Lion field 2010 oil discovery in the north Falkland basin.
“Rockhopper has made excellent progress in commercializing the Sea Lion project which offers attractive returns and fits well with Premier’s proven operating and development skills,” said Simon Lockett, Premier’s CEO at the moment of announcing the deal.
“This transaction extends our strong growth profile beyond 2015 and offers both exploration and development upside for our shareholders. We look forward to working closely with Rockhopper and the Falkland Islands government on this very exciting project,” he added.
London’s financial district showed no concerns about the controversial deal, pushing up the shares of both Premier and Rockhopper.
Argentina on Monday announced it had sent a letter to Premier, as it had done previously with Rockhopper and other UK-listed companies searching for oil and gas off the Falklands saying it will press criminal and civil charges over “illegal” drilling, plus describing the companies involved as “clandestine”.
However the Foreign Office spokesperson said Argentina’s legal threats had no basis in international law, saying their system did not apply to the Falklands. “The fact that oil companies are able freely to raise capital on the markets suggests that international business take this view too” added the spokesperson.
In June the government of the Falklands announced that it would be holding a referendum on the Islands “political status” to try to bury the issue of sovereignty once and for all despite the continuous pounding from Argentina.