Oil and gas activity in the Mediterranean has not declined quite as much as it has in other parts of the world and it is likely to rebound sooner than those countries with higher-cost operations, according to Stephen Colville, CEO of the Mediterranean Maritime Hub.

Mr Colville explained that activity in the Mediterranean was not as hard hit as elsewhere by the drop in oil prices, because the countries with oil and gas reserves across the Mediterranean were very development focused.

“They are continuing to actively seek to develop their resources at the earliest opportunity, either gas for their own energy needs or oil to generate revenue to stabilise and grow their economies,” he said.

“This is why we have seen a continued, albeit slowed, stream of announcements of discoveries and development projects. The Mediterranean’s natural advantages of more benign sea and climate conditions help provide lower development and operation costs over other oil and gas basins, particularly northern Europe and Brazil.”

The political instability in some of the countries has not had as much of a negative impact as might be thought, he added, particularly in those with existing strong offshore activity, which has largely been able to continue operating.

“Ultimately, it is not really in anyone’s best interest – whether you are the government or opposing factions – to destroy one of the country’s major revenue engines required to power future social stability and economic growth,” Mr Colville said.

The Mediterranean has the dual attractions of being highly prospective and relatively juvenile, he explained, and its potential has only just started being tapped into with plenty more decades of growth and activity ahead.

“So this provides excellent opportunities for companies with the requisite capacities and capabilities to grow their investments and capture market share,” he stressed.

“We are getting a lot of enquiries from existing Mediterranean players and potential new entrants, all looking for the right regional operational base or for the right project support location.”

Thanks to Malta’s perfect location, the hub is ideally positioned to serve drilling, subsea and marine operations, providing engineering, maintenance and storage and other services.

The oil and gas industry in the Mediterranean has a desperate need for assured project delivery on timing, cost, safety and quality, right across a broad spectrum of activity.

“The hub can do this, providing availability, predictability, reliability and repeatability through a number of unique selling points,” Mr Colville explained.

Companies rarely controlled or owned the whole site, so what clients could do was often dictated or restricted by somebody else.

“What clients want is total flexibility: we can make the hub available to them when and how they want it – through the hub’s ‘White Label’ operating model.”

We are not trying to recreate what there is elsewhere because that evolved to serve what the industry wanted yesterday… We are focusing on building what the industry needs now and for the future

For the last decade – even in the high oil price scenario – margins were very tight. The industry is not just focusing on surviving this lower price environment, it is searching for ways to be sustainable and profitable in any oil price scenario.

The challenge facing the industry is delivering a systemic major reduction in costs, coupled with significant improvements in operational efficiency.

“This is where Malta comes into the frame; in what it offers and how it does things, both within the hub and beyond. The industry is looking for a location which can provide holistic and fully-integrated facilities and services. Malta has to be able to offer the oil and gas industry full capabilities and capacity, across the supply chain.”

To date, companies tended to go to the nearest port, which would not have all those things in place and typically meant project overruns, inefficiencies and high costs.

Aberdeen evolved to serve as a hub precisely to overcome these problems. In Malta, the Mediterranean Maritime Hub is intended to serve the same purpose.

The concessionaire is currently assessing the whole site to plan the upgrades required, something that the CEO sees as a necessarily staged programme.

The former Marsa Shipbuilding site was taken over by Ablecare Oilfield Services Holdings earlier this year, after it won a competitive bid by the government for the 175,000 square metres. The land was leased to Ablecare for 65 years, and the company intends to make an investment of around €55 million over the next 10 years.  Its workforce of 40 has already been boosted to 96.

“We have the opportunity to build the facility collaboratively with the industry to ensure we provide exactly what it needs.

“We are not trying to recreate what there is elsewhere because that evolved to serve what the industry wanted yesterday.

“We are quite deliberately focusing on building what the industry needs now and for the future. This includes both what we do and how we do it, and is prompting significant interest among our prospective clients,” he added.

The need for client operational flexibility is being driven by new trends necessitated by the tight margins. For example, rigs are no longer being contracted for three to five years at a time; contracts are more likely to be for three to six months with rigs then taken out of commission temporarily – warm-stacked – for a while.

This changes the nature of the game, with everything from regular maintenance to ad hoc projects being examined to identify new ways of working, all subject to ever tighter deadlines – and creating greater logistical challenges.

“One of the unique selling points of the hub is that everything is in one place. However, there are still clients looking for us to provide them with the hub’s same high quality delivery in other locations in and around the Mediterranean.

“To do so, we have developed our ‘hub & spokes’ model – using the central core capability of Malta to enable and support delivery in other ports or on offshore locations, like rigs or platforms.

The hub’s 30,000 square metres of high sheds with overhead cranes in close proximity to the quaysides with broad adjacent lay-down areas and extensive yards is unique within the Mediterranean.

They enable safe, secure, clean and controlled working capability 24/7. All the people who come to the hub are excited about the possibilities these offer.

Mr Colville confirmed that the hub would be a free trade zone – a huge advantage for an industry where equipment can be worth tens of millions and even when bringing something in for quick turnaround works, risks exposure to otherwise high duties. This makes Malta a very attractive destination of choice.

Mr Colville, who has been involved in oil and gas since the late 1990s, has led public affairs, government relations and communications for major companies around the world, and has spent the past four years as the president and CEO of the International Association of Drilling Contractors.

His experience in bringing governments and operators together has already caught the eye of the Maltese government, which has roped him in to help organise an international symposium next spring – when Malta holds the EU rotating presidency – to look at what Malta could do on a regulatory and fiscal basis.

“Malta is not only poised to become a major hub for the oil and gas industry, it has the opportunity to use its term in the EU Presidency to help positively shape energy policy and enable development of hydrocarbon resources right across the Mediterranean,” he said.