Premier Receives Extension for Block CR-ON-90/1

Not many foreign explorers are keen to work in India's insurgency hit and logistically challenging northeast. Britain's Premier Oil is an exception.

During the past two years Premier has farmed into two blocks in the northeastern Assam-Arakan basin: AAP-ON-94/1 and CR-ON-90/1. Premier is operator of both blocks and in contrast to the dismal record of earlier operators has robustly initiated exploration work.

Recognition of this has come from the ministry, which took no time to approve Premier's application for a three-month extension to 'Phase-I' of the exploration period at CR-ON-90/1. When permission finally arrives, it will be the second extension for Premier on this block. The first extension for 11 months to June 12, 2004 allowed Premier to complete the 'Phase-I' work program.

Information available with PETROWATCH shows that Premier exceeded the minimum work program commitment in 'Phase-I'. Premier reprocessed 850-km old 2D seismic against a commitment to reprocess 100-km old 2D and shot 230-km fresh 2D against a commitment to acquire, process and interpret only 200-km fresh 2D. We are told that processing and interpretation of the fresh 2D seismic is likely to be completed by next month. Premier needs the three-month additional extension to carry out "special processing to improve imaging" and "to identify a drillable prospect" on this geologically complex block.

As is the norm, each extension will be deducted from the time available to the operator in the next exploration phase. For Premier this means the 'Phase-II' exploration period will last only 10 months after taking into account the total 14 months extension it will get in 'Phase-I'. We are told this will be sufficient time to drill the one exploration well committed by Premier in 'Phase-II'.

Premier farmed-in to CR-ON-90/1 (Area: 2,542-sq km) in June 2003 and the block's present equity structure is 84% with Premier and 16% with Essar. Premier wants to assign a portion of its participating interest to Indian Oil. In June 1998, the ministry signed a PSC with the original shareholders Essar Oil (operator), Hindustan Oil Exploration Company and Tullow Oil. Tullow and HOEC have relinquished their interest in this block.

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