PREMIER Oil yesterday said it had agreed a $1bn (£647m) deal to explore the Falkland Islands with Rockhopper.
The FTSE-250 British company said Rockhopper, an explorer that made an oil discovery in the Falklands in 2010, was the ideal partner.
It will pay an initial $231m in cash for the deal as well as providing around $770m to help build infrastructure.
The pair say that oil is expected to start pumping in the Falklands in mid-2017.
The deal, which will give Premier a 60 per cent stake in the Sea Lion oil field, will add about 200m barrels of oil to its resources.
The Sea Lion field is large in comparison to fields in the North Sea, although small fry compared with the around 50bn barrels of oil thought to lie offshore Brazil.
Tensions are running high in the Falklands region with the UK and Argentinian governments having frosty relations in a long running dispute over the sovereignty of the islands. But Premier dismissed concerns about investing in the politically sensitive project which has prompted Argentina to threaten legal action against oil firms active in the Falklands 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 yesterday.