Premier in talks with Amerada Hess over sale of Pangkah interest

British oil and gas firm Premier Oil is negotiating with American oil and gas firm Amerada Hess to sell its stake in the Pangkah production sharing conract (PSC) block in East Java to the latter, industry sources said .

The sources said both companies had been in talks for about two months and the negotiation was nearing completion.

?They have been reportedly close to the conclusion of the negotiation. Amerada will acquire Premier?s stake in the block,? a source told Petromindo.Com on Thursday.

The sources said Premier wanted to sell its stake in Pangkah because it wanted to concentrate in the West Natuna area in the South China Sea, where it operates several blocks from it has been supply gas to Singapore and plan to supply the same commodity to Malaysia.

Other sources said Premier feels troubled by the continued protests by the local fishermen who accused the company of polluting the area?s waters with its operation.

State oil and gas company Pertamina?s director of production sharing management Iin Arifin Takhyan confirmed to Petromindo that both companies were negotiating over the sale of the Pangkah stake.

But, he refused to specify the reasons behind Premier?s sale of its stake.

?Selling and buying stake is normal in this industry,? he said.

Premier Oil has a 40 percent stake in the block, while Dana Petroleum, also a British firm, has 12 percent. The remaining stake are owned by Amerada Hess (Indonesia-Pangkah) Ltd (36 percent) and Gulf Resources (Pangkah) Limited (12 percent).

Pangkah is approximately 40 kilometers north of East Java?s capital of Surabaya and the major industrial center of Gresik. Surabaya is the country?s second largest city.

Premier announced in November last year that it and its partners found an oil reserve at the Sidayu I field of the block, which flowed 1,450 barrels of oil per day.

Aside from the oil discovery, Premier and partners have also found a significant gas reserve in the Ujung Pangkah field of the Pangkah block. The field, located five kilometers south of Sidayu, contains a certified reserve of up to 500 billion cubic feet of gas.

Premier Oil Indonesia?s president Robin Allan earlier said the company and its partners planned to start producing oil at the Sidayu field early next year.

Premier and partners are also now negotiating to sell gas from the Ujung Pangkah field to buyers in the province, but Alan refused to identify the prospective buyers, (Godang)