Oil is expected to start pumping in in mid-2017, said the partners.
Britain's Premier Oil agreed a US$1 billion deal intended to transform the British Falkland Islands into an oil producer. Premier said today that it would partner Rockhopper, an explorer that made an oil discovery in the archipelago in 2010, paying it an initial US$231 million in cash as well as providing around US$770 million to help build infrastructure.
Premier dismissed concerns about investing in the politically sensitive project which has prompted Argentina to threaten legal action against oil firms active in the British Falkland Islands for what it sees as "illegal" drilling.
"I don't want to sound flippant, but the oil industry deals with this type of political risk, of border disputes, of disputed territories all around the world, frankly," Premier's Finance Director Tony Durrant said.
Oil is expected to start pumping in the Falklands in mid-2017, said the partners.
The deal, which will give Premier a 60 percent stake in the Sea Lion oil field, will add about 200 million barrels of oil to its resources - a substantial boost. The Sea Lion field is large in comparison to fields in the North Sea.
Durrant added that Premier was providing Rockhopper with a future possible financing facility should the company not be able to raise the debt to pay its part of development costs.
"It's very difficult (to raise debt) at the moment and that of course if one of the reasons why we've been able to negotiate a very attractive deal. The Argentine situation doesn't help but it's much more the state of the capital markets at the moment," he said.
The partners said they expected the deal, which is subject to approval by the Islands’ Government, to complete in September.
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