LONDON (Reuters) - Premier Oil will look at extending the timeframe for oil price hedges beyond 12-18 months to protect its balance sheet and return on investments which might take years to start operating fully, Finance Director Richard Rose said.

"One concern in the industry has been the depth of this bear market ... I think extending the timeline is something we will look at, to put some small hedges on beyond the 12 to 18 months period," Rose told Reuters on Wednesday.

"One of the areas we will look at (with) new projects and investment decisions, is baking in some kind of floor pricing ... for example, with the Tolmount gas field development which will come onstream at the back end of 2020/2021."

Premier is expected to make a final investment decision on Tolmount later this year.

Premier's fellow London-listed oil producer Tullow , in comparison, has hedged 60 percent of its output this year at $52 a barrel, with more than half of this including a ceiling of $75, it said in its annual report.

This hedging structure is known as a collar and allows for cheaper hedging, although it can limit a producer's exposure to rising oil prices.

Premier has no such collars, not least because the spot price is around $70 a barrel and hedging costs have fallen.

"The improvement in the market has seen more credit open up to us and that has improved our pricing (probably) by around $1 a barrel in terms of the hedging pricing we can get at the moment compared to where we were twelve months ago," Rose said.

"Often the best price comes from the trading houses and the majors (rather than banks)."

But high spot prices and a market in backwardation, when prompt prices are higher than current futures contracts, limit the advantage of hedging with a price floor.

"You see that dilemma across the sector about how much you hedge now versus wait and see if current prices remain and the curve increases."

(Reporting by Shadia Nasralla; Editing by Jason Neely and Dale Hudson)

By Shadia Nasralla