If Malta strikes oil

The article by Joseph Muscat entitled Managing An Oil Producing Economy (January 2) should be seriously contemplated upon especially by those who tend to over-simplify the economic and political implications from Malta striking oil. The managerial and social aspects mentioned in Mr Muscat's article are definitely worth noting especially by our political class that, being directly responsible for running the country, would also be held accountable for any adverse impacts - such as strategic and environmental impacts - associated with managing a black gold economy.

It was on August 20, 1980 that Malta probably experienced its worst incident with oil exploration activities. On that day Libyan gunboats approached the Texaco rig Saipem II, threatening personnel on board and forcing activities to stop.

Texaco had been commissioned by the Maltese government to drill for oil in an area of sea distant enough from the median line in the Libya-Malta channel and within what the Maltese government regarded as Malta's territorial waters. It turned out that the Maltese and Libyan governments had very different opinions in regard to the partitioning of the continental shelf between the two countries.

The Maltese government argued in terms of a "median line", namely a line equidistant from the nearest points on the relevant coastlines and partitioning the continental shelf into two roughly equal parts.

On the other hand, the Libyans argued that partitioning of the continental shelf between the two countries should be on the basis of the size of the respective coastlines. This position effectively implied that Malta's continental shelf rights hardly extended to an area greater than its territorial waters even if the entire Maltese coastline, not just that facing Libya, was taken into account!

The legal aspects of the Malta-Libya continental shelf dispute were admirably described by Edgar Mizzi in his Malta In The Making 1962 - 1987. Dr Mizzi was personally involved in the dispute proceedings, himself presenting Malta's case before the International Court of Justice in The Hague.

Maltese and Libyan continental shelf jurisdictional rights have been settled since the 1980 events. However, irrespective of internationally recognised continental shelf boundaries, it may be the case that the entire political balance in the Mediterranean region may change radically if Malta becomes an oil producing nation. And this does not imply that it may change entirely to Malta's favour. If prospective Maltese oil deposits were extensive enough to be commercially viable, it may not just be the case of Malta's strategic position in the Mediterranean being revamped. Malta may probably need to revise its internal and foreign policy to ensure a higher level of national security given the consequences that arise from attaining an oil producing status. International politics, particularly in the light of Malta's EU membership status, may arguably downplay any risks involved.

As an oil-producing country Malta would certainly face tough challenges from an environmental management perspective. First of all there would be the need for enough expertise, management structures and financial resources making it possible to evaluate the environmental impacts that oil production activity would unquestionably generate. This should go beyond the standard environmental impact assessment (EIA) process, the evaluation of environmental impacts needed at the higher policy-making level. A national policy for the management of oil deposits would probably require evaluation within the context of strategic environmental assessment (SEA), an area which has been locally addressed in the legislative context only very recently through Legal Notice 418 of 2005.

The main advantage of adopting the SEA approach would be that the key environmental issues associated with oil production activities would be assessed at the earliest stage possible, taking into consideration any plans or programmes in implementing Malta's oil production policy. This approach clearly aims at providing the highest possible level of environmental protection even before EIAs are commissioned to investigate potential impacts from specific projects in the oil industry.

Environmental impacts associated with oil production industry activities are very complex and extensive, ranging from aesthetic impacts resulting from land-based or offshore installations to impacts on the atmospheric, marine and land environments as a result of routine or accidental oil or chemical spills.

The geographical siting of the oil extraction site, whether land-based or at sea, would be a major determining factor as far as environmental impacts are concerned. The flaring of considerable amounts of hydrocarbon gas and also hydrogen sulphide is usually a major issue with oil production activity. The combustion of hydrogen sulphide gas (the formation of this gas is attributed to the sulphur content of the crude), for example, leads to the formation of sulphur dioxide, an acidic gas which contributes to acidification of the environment.

Acid deposition resulting from gas flaring in crude oil processing may even dwarf acidification problems presently attributed to power generation at the Marsa and Delimara power stations, especially if this hypothetical industrial activity intensifies.

The generation of polycyclic hydrocarbons (known also as PAHs) would also be another major problem bearing in mind the carcinogenic nature of these chemicals and therefore human health impacts.

Another issue would be the transport of oil once the crude is recovered and whether any refining activities would be carried out within Maltese territory.

Very clearly, the diversification of the Maltese economy to include oil production would certainly entail a significant environmental cost, and this would have to be deducted from any economic rent derived.

An important unknown would be the relationship between the tourism industry, which presently sustains a substantial segment of the Maltese economy, and an emerging Maltese oil production industry. Can these two "cohabit" given the environmental impacts associated with crude oil processing in a country the size as ours? I would rather expect that every effort would be made to ensure the co-existence of these two industries.

The tourism industry in Malta has shown resilience with conflicting industries such as construction and fish farming. However, one cannot exclude that Malta's standing as a tourist destination would diminish and that we would probably have to face a transition from a tourism-based economy to one gearing up on oil production activities, the consequences of which are difficult to predict. The Maltese workforce, particularly those directly involved in tourism, will have to show the flexibility to cope with such a radical change in the island's economy. In addition, the oil production industry job market usually requires specialised trained personnel (including highly qualified scientific personnel) that may not be so easy to find locally. The influx of a substantial foreign workforce cannot therefore be excluded especially in the first years of oil production activity.

But then, apart from specific environmental impacts, how would Malta's eventual striking of oil configure with the need to encourage a shift towards the use of clean renewable energy? Rightly so, in his article Mr Muscat refers to the fair distribution of wealth derived from oil production activities. However, it must be ensured that any economic gains derived from oil production are also channelled towards the eventual implementation of clean energy alternatives. Given the global concern with climate change issues and the acknowledged need to shift to cleaner sources of energy, it would make no sense if Malta disregards its efforts and commitments in the implementation of clean energy alternatives on the grounds that it would have become self-sufficient in crude oil. Irrespective of the size of a potential crude oil find, investing in cleaner energy sources should always remain a priority.

Mr Pulis teaches environmental science and chemistry at the Giovanni Curmi Higher Secondary School in Naxxar.