Premier Closes Indonesian Farm-down

The UK's Premier Oil announced on January 26 it had closed the farm-down of its interest in the Tuna production-sharing contract (PSC) offshore Indonesia to Russia's state-owned Zarubezhneft.

Premier was awarded operatorship and a 65% share of the Tuna block in 2007, with Japan's Mitsui Oil Exploration given 20% and South Korea's GS Energy 15%. Premier remains operator following the farm-down's completion, but with only 50%, while Zarubezhneft controls the remaining 50%.

Zarubezhneft will carry Premier for its share of a two-well campaign to appraise the Tuna discoveries. The pair have also secured a one-year extension of the PSC's exploration period until March 2022.

Premier and its former partners drilled two wells at Tuna PSC in 2014, resulting in the Kuda Laut and Singa Laut oil and gas discoveries, estimated to hold 100mn barrels of oil equivalent. In November 2017, Premier signed a memorandum with Indonesian upstream regulator SKK Migas covering future gas sales from Tuna to Vietnam.

The deal marks Zarubezhneft's entry into Indonesia. The company's main operations are in Russia and Vietnam, although it also has exploration rights in Cuba. It is vying for projects elsewhere but has encountered setbacks. It unsuccessfully bid in a licensing round in Ecuador in 2019 and had hoped to develop oil in Iran, but was forced to pull out because of US sanctions. It also signed a preliminary deal to work in Algeria last year.

Premier, which is merging with fellow UK producer Chrysaor, also produces gas at Indonesia's offshore Natuna Sea A block. It is exploring the country's South Andaman Sea gas play at the Andaman-1, Andaman-2 and South Andaman blocks with the UAE's Mubadala Petroleum.