Phoenicia Energy Company abandoned exploratory oil drilling in the Ħaġar Qim well because no reservoir was found.
Ħaġar Qim-1 was plugged and abandoned with no indication of hydrocarbon, Phoenicia Energy Company told the consortium Mediterranean Oil and Gas according to an update yesterday by the London Stock Exchange’s Regulatory News Service.
Exploratory drilling started in May and was planned to last 45-55 days. But the rig – the Noble Paul Romano – will now be moved to Morocco.
Phoenicia Energy Company is the operator of the Area 4 licence and a wholly-owned subsidiary of Genel Energy plc, the majority shareholder in the consortium holding the licence for exploratory drilling in the area.
It was simply a strong and efficient operational performance that brought the well in ahead of schedule
Asked why the well was abandoned ahead of schedule, a spokesman for Genel Energy told Times of Malta: “It was simply a strong and efficient operational performance that brought the well in ahead of schedule. As for the next steps, we will now review the results of this well prior to making a decision on possible further exploration in the licence area”.
Sources close to the government said Phoenicia Energy Company was seeking a six-month extension to evaluate the results of the well and decide whether to enter into the second exploration phase.
The government will be having talks with Phoenicia Energy Company and Melita Exploration Company in the coming weeks.
Efforts in this sector would continue as it was only through further exploration drilling that one could truly evaluate the potential of Malta’s offshore acreage, the sources said.
Tony Hayward, CEO of Genel Energy, had predicted a one-in-five chance of finding oil, adding that the odds could be twice that.
He was CEO of British Petroleum when the Deepwater Horizon oil rig accident occurred in the Gulf of Mexico in 2010, killing 11 men. He was appointed CEO of Genel Energy the following year.
Genel Energy invested about $30 million in the Ħaġar Qim venture, according to Tony Trevison, founder and significant shareholder of the consortium Mediterranean Oil and Gas.
He had told the Business Observer in an interview that the investment was a calculated risk and the company was running the chance of either writing off that cost and walking away with nothing or potentially making billions of dollars.
The government does not invest in the seismic studies or exploratory drilling though it receives hundreds of thousands of euros from the licencees.
It is the investors who take the risk but they stand to gain significantly if oil is struck in viable amounts.
The details of the production sharing agreement signed between Malta and the company were never revealed. Mr Hayward had described the terms as “very competitive”.
Sources speaking to the Business Observer were hopeful that even if the Ħaġar Qim well was not successful, there could still be oil or gas just a short distance away.
“So more exploratory wells could be drilled. We should never give up,” the sources had said.
The Noble Paul Romano will now drill on the Sidi Moussa block off Morocco in which Genel has a 60 per cent working interest, according to a trading and operations update released by Genel.
Located out at sea, about 150 kilometres south of the megalithic temples that lent the well its name, it was drilling in waters about 450 metres deep, which, while not excessively deep, led to challenges because the deeper it gets the harder it is for a rig to anchor.
The objective of the well was about 2,500 metres below sea level.
Transport Minister Joe Mizzi had said in 2006, when he was a member of the Opposition, that there was undeniable proof of oil presence in Maltese territorial waters.
He had said he was so sure about it that he would resign if no oil was found when Labour was returned to power.