The only consortium currently studying the potential of finding oil has decided to persevere and has been given an 18-month extension, sources have confirmed.

The original 2012 agreement ran out in early June but the government has agreed to give Capricorn Malta and Melita Exploration (subsidiaries of Cairn Energy and Rockhopper Exploration respectively) until December 2016 to carry out more studies in the contract area.

The 2012 exploration study agreement covers Blocks 1, 2 and 3 of Area 3 in the Sicily channel, covering an area of 6,000 sq.km.

The agreement allowed the consortium to carry out studies, reprocessing of existing data, acquiring new 2D seismic data and limited capital works, with the right to negotiate a production sharing contract on an exclusive basis thereafter.

There was an option in the agreement saying it could be extended in order to acquire 3D seismic data, and the decision to go for this option is considered to be a positive sign.

Cairn told its shareholders that the work programme until now had consisted mainly of the reprocessing of existing 2D seismic data, at least 1,500 km of new 2D seismic data, and technical studies to correlate the old and new data, together with existing well data.

“Hydrocarbons have been demonstrated in a number of plays in the area and with modern seismic data starting to unlock new potential, the basin offers a number of opportunities for discovery,” Cairn reported.

With modern seismic data starting to unlock new potential, the basin offers a number of opportunities for discovery

The government has already received over $3 million from the consortium under the terms of the agreement. With the price of oil recovering all too slowly, and companies cutting back on exploration all around the world, the news of the extension was particularly welcome.

Last year, exploration of the Ħaġar Qim well in Area 4 was abandoned and, although the concessionaire Phoenicia Energy was granted an extension until January 2015 to conclude testing on the findings, it decided not to proceed any further.

Phoenicia Energy Company is a wholly-owned subsidiary of Genel Energy plc, with Rockhopper holding a minority shareholding which it acquired from Mediterranean Oil and Gas for £29 million last year.

The Area 4 concession is currently open for exploration by interested parties.