The dots on the world map denoting Premier Oil’s operations already spanned an area from the North Sea to Pakistan, Indonesia and Vietnam before last week’s announcement that it is paying $1bn (£650m) to enter the oil exploration market in the South Atlantic.

However, the company’s deal to buy a 60pc stake in licences off the Falkland Islands held by fellow British oil group Rockhopper Exploration promises to take it into much more politically volatile waters.

Earlier this year, The Sunday Telegraph revealed that the Argentine government sent a letter to 15 British and American banks threatening them with legal action for advising companies exploring for oil around the Falklands.

The letter stated that the government would “institute appropriate legal proceedings against any oil company currently involved in unlawful hydrocarbon exploration activities in the Argentine continental shelf”.

But if any of this concerns Premier Oil’s chief executive, Simon Lockett, he is keeping his worries well under wraps, admitting that he views the investment in Rockhopper’s Sea Lion field – which is thought to contain 320m barrels of oil – as a beachhead for further development of potential oil in the disputed waters.

“We are chasing similar geologies,” he says in an interview with The Sunday Telegraph. “The key point for us is that we think there is still some significant exploration potential on the blocks.

“So from that perspective, yes we would like to expand the operation with some successful exploration, but we need to get out there and drill it first.”

That is set to happen by 2017, with any move further afield risking exacerbating tensions with Argentina. Lockett appears ready for the challenge.

“Have we dealt with this specific situation before?” he replies rhetorically when asked the question. “I don’t think there are many companies that have dealt with this specific issue, other than the other oil companies operating in the Falkland Islands.

“But we took lots of advice from lawyers through to talking to government and third- party political risk analysts. We had a long conversation about it with the board and decided that this was a good project that we should go and invest in.

“We are comfortable with the view that we’ve taken. Our view is that having looked at all the different parts of it and taken advice, this is a good project to invest in and that’s why we’re investing in it.”

Asked how seriously he takes Argentina’s threat, Lockett responds: “We take our business very seriously. We would not be investing in this project if we thought we couldn’t go out and develop the project.”

The Falklands investment might still feel like one of the riskiest ventures in the 78-year history of a company founded in Scotland as the Caribbean Oil Company in 1934 to pursue oil and gas exploration and production activities in Trinidad.

As Lockett says, however, geopolitical risk is part and parcel of being an oil and gas company. Premier, which moved into the North Sea in 1971, is now one of the largest British independents in that territory, following its £221m acquisition of Aim-listed explorer, Encore Petroleum, earlier this year.

Over the years, however, it has had operations in its share of politically-sensitive territories. It extricated itself from Burma in 2003 after years of political pressure, including a direct request to pull out from the former foreign secretary, Robin Cook. It also served notice to quit the Congo last year.

Lockett, who has lived in Albania, Singapore and Jakarta, Indonesia, claims border issues are nothing new for Premier. The South China Sea frontier agreement between Vietnamese and Indonesian waters is even based on Premier’s licences.

The two nations “de facto resolved their issue as a result of doing the award of the licences”, he says.

Lockett doesn’t expect that to happen this time around, but declares: “Every international oil company has seen or been involved in government-to-government discussions or government-type discussions. It’s the nature of the oil and gas business.

“I guess the philosophical way of looking at it is that most of the oil and gas that you can find in the nice places has already been found, ” he adds.

“Most of the oil and gas that you’re going to develop in the world that is not subject to some form of issue has already been done.

“The simple fact is that the nature of this business, whichever oil company you are, is that if you are looking to find good-quality reserves in the world, it carries geological, development and geopolitical risk. That’s part of the business.”

Premier believes there are technological synergies between the Sea Lion development and its other fields, saying its North Sea, Vietnam and Indonesia sites all require the use of floating production storage and off-loading vessels, while the crude oil at Sea Lion is “relatively waxy”, similar to the oil at Premier’s Vietnamese operation.

The North Falklands site is also a rift basin similar to Premier’s locations off Vietnam and Indonesia and the central North Sea.

Lockett believes the new exploration will be a good fit for Premier’s strategy of operating rift basins and fold belts, such as its former Pakistan operations and a potential field in Iraq, where the company is negotiating over an onshore licence through a joint venture with Russia’s Bashneft .

Premier also plans to jointly explore opportunities in offshore southern Africa with Rockhopper as part of last week’s deal.

“From a technical perspective this is a good-quality project that fits very well with what we’ve been doing around the world,” Lockett said of the Falklands plan.

“The other similarity is that it is obviously a long way away from anywhere, frankly, so there are some big logistics challenges associated with doing that.

“But our Indonesian operations are about 2,000km away from our base in Jakarta, so we run airplane and helicopter operations to a distant logistics position from there. It’s not as if we haven’t done this kind of thing before.

“One of the things that differentiates Premier in many ways is that we have very strong development and operating skill capability for a smaller oil company.”

Premier, which Lockett has run since 2005, has risen in value 13-fold since pulling out of Burma and currently has a stock market capitalisation of £1.9bn – nearly triple Rockhopper’s £724m.

“We had some small interests in the North Sea when I took over,” he says. “We thought about selling out but we haven’t. We have kept the cash and reinvested it.”

Now the company is producing 60,000 barrels a day, split equally between Vietnamese oil, Indonesian gas, Pakistani gas and North Sea oil.

It expects this to increase to 100,000 barrels a day by 2016, with most of the additional output coming from the North Sea.

That will increase the company’s annual after-tax cashflow of $700m-$750m to about $2bn at current oil prices and the Sea Lion production should lift that by a further 50,000 barrels a day.

“The North Sea is a quarter of the business but it’s going to be more like half the business in four years’ time,” Lockett said.

That’s the strategy, Argentine hostilities notwithstanding. “We’ve got a plan, but plans need executing,” acknowledges the Premier chief executive. “What we really need to do is carry on executing really well.”

Premier Oil by numbers

1934 Founded in Scotland as the Caribbean Oil Company, exploring in Trinidad

£1.9bn current market capitalisation

60,000 barrels-a-day of current oil and gas equivalent production

60pc stake it is buying in Sea Lion development off the Falkland Islands

$279m initial payment for Sea Lion stake and exploration costs

$722m further costs of development it faces

$2bn-$3bn cost of getting to first oil in Falklands

£141m pre-tax profits in 2011

£827m revenuesin 2011. Premier expects the Sea Lion field to lift oil production by 50,000 barrels a day