Originally Posted by PF SRD
It is possible to cast any spell as a counterspell. By doing so, you are using the spell's energy to disrupt the casting of the same spell by another character. Counterspelling works even if one spell is divine and the other arcane.
How Counterspells Work: To use a counterspell, you must select an opponent as the target of the counterspell. You do this by choosing to ready an action. In doing so, you elect to wait to complete your action until your opponent tries to cast a spell. You may still move at your normal speed, since ready is a standard action.
If the target of your counterspell tries to cast a spell, make a Spellcraft check (DC 15 + the spell's level). This check is a free action. If the check succeeds, you correctly identify the opponent's spell and can attempt to counter it. If the check fails, you can't do either of these things.
To complete the action, you must then cast an appropriate spell. As a general rule, a spell can only counter itself. If you are able to cast the same spell and you have it prepared (or have a slot of the appropriate level available), you cast it, creating a counterspell effect. If the target is within range, both spells automatically negate each other with no other results.
Counterspelling Metamagic Spells: Metamagic feats are not taken into account when determining whether a spell can be countered.
Specific Exceptions: Some spells can counter other specific spells, often those with diametrically opposed effects.
Dispel Magic as a Counterspell: You can usually use dispel magic to counterspell another spell being cast without needing to identify the spell being cast. Dispel magic doesn't always work as a counterspell (see the spell description).
Originally Posted by PF SRD
Action: Identifying a spell as it is being cast requires no action, but you must be able to clearly see the spell as it is being cast, and this incurs the same penalties as a Perception skill check due to distance, poor conditions, and other factors.
Identify a spell as it is being cast 15 + spell level
The first quote gives the general rules for counterspelling. There is, oddly, no requirement that you be a be able to see and/or hear the caster. In fact, as written in that section, I could choose to counterspell the king's personal healer, even if I'm half a world away.
The Spellcraft skill, however, does give a bit more detail. It lays out that you have to see the spell being cast, which rules out the half-a-world-away counterspell. So what's it mean? Well, it doesn't say you have to see the somatic components or the material components or the focus. It just says you have to be able to see the caster as he/she/it casts the spell. Do that and you get a Spellcraft check with a DC of 15 plus the spell level. If you're successful at that check, you know what spell is being cast. If you had taken a ready action to counter, you could then attempt to counter the caster - despite his having used Still and Silent and not needing any components.
At least, that's how I read it.