Oil well is likely next year
Oil drilling firm expects to gain approval from the government
An oil company can start drilling for oil in Maltese waters next year if the government gives it the green light.
This will only be the second well to be dug in a decade as part of the country’s efforts to strike oil.
Sources close to Mediterranean Oil and Gas, which has a Maltese oil exploration licence, said that “the scientific part of the exploration is now over and the company is aiming to start drilling in 2013”.
The area is situated to the south, close to Libyan oil producing zones.
The company, which has just announced a partnership with Genel Energy on the Malta licence, is waiting for the government to extend its licence for another year to enable it to start drilling.
The partnership is being contested by Leni Oil and Gas, a small oil company that had a minority share in Mediterranean Oil and Gas.
Reuters reported yesterday that Leni, which sold its 10 per cent stake in August, could start legal proceedings against its former partner. The company said it would not have sold its interest “for $1 plus liabilities” had it been aware of interest from Genel Energy.
A government spokesperson said a due diligence exercise on Genel Energy was under way and a final decision was expected soon.
He indicated that the exercise was expected to yield positive results and the government would give its go-ahead for the drilling to start.
Asked what proportion of oil would come Malta’s way should drilling be successful, he said it depended on the size of the find and its profitability.
The chief executive of Genel Energy, which was set up last year, is Tony Hayward, the former top official at BP, a British oil company, who was forced to resign after a major oil spill from an oil rig ruined the Gulf of Mexico.
Genel Energy is becoming an important player in the oil industry and over the past few weeks announced mergers in a number of exploration sites, including Tunisia and Libya. Listed on the London Stock Exchange, it is already the largest oil producer in the Kurdistan region of Iraq.
Mediterranean Oil and Gas signed a production sharing contract with the government in July 2008 with anchorage in the south of Malta close to oil producing sites offshore Libya.
The company took longer than expected to reach the drilling phase as it wanted to carry out more comprehensive scientific surveys on the geology of the area using 3-D technologies, the latest in the field.
According to Genel Energy, which has committed $30 million to the deal, the seismic surveys identified a number of plays – potential oil reserves in a particular geological setting – and several prospects have been defined in each play type.
“It is now apparent that this part of offshore Malta is geologically analogous to the Libyan Sirte basin, containing analogues to proven producing fields in Libya in addition to those in offshore Tunisia,” Genel said in a recent statement.
The last exploratory oil well drilled under a Maltese licence goes back to 2002 when Italian company ENI drilled Lampuka 1 in part of Area 3, also in the south of Malta.
Despite shows of oil and gas, the well was abandoned as it was not commercially viable.
Additional reporting by Kurt Sansone.