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Oil exploration potential to be assessed

Three offshore blocks totalling 6,400 square kilometres have been awarded to the oil company Capricorn Malta Limited to conduct a study, acquire additional data and assess the exploration potential of the acreage under an Exploration Study Agreement.

The contract was signed by Resources Minister George Pullicino. The offshore areas granted are Blocks 1, 2 and 3 of Area 3, located north of Malta.

The principal financial obligations of the two-year agreement are:

* A signature bonus of $100,000 to be paid within 15 days of signing of the contract;

* Expenditure of at least $2.5 million on exploration operations within the term of the agreement;

* Annual rentals of $192,000 per year;

* Annual administration fee of $100,000;

* Annual contributions for education and equipment of $75,000.

The work programme consists mainly of the reprocessing of existing 2D seismic data, the acquisition and processing of a minimum of 1,500 km of new 2D seismic data and the carrying out of technical studies consisting of the integration and interpretation of the existing and reprocessed data together with the newly acquired seismic data with appropriate well data and the mapping of key horizons over the area covered by the available seismic data.

The agreement may also, at the option of Capricorn Malta, be extended for an additional 12 months if the company undertook to carry out an additional annual work programme comprising of acquiring 3D seismic.

At any time during the term of the agreement, Capricorn Malta has the option to enter into a production sharing agreement with the government for any part of the acreage covered by the agreement.

The terms would be negotiated at the time.

Technical meetings will be held between the government and the oil company to review and discuss the interim results of the exploration study.            

Capricorn Malta is a subsidiary of Cairn Energy plc, a company listed on the London Stock Exchange.

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