The Government is hoping to conclude talks on a preferential oil supply deal with Libya by the end of the year, The Sunday Times of Malta has learnt.
An understanding was reached on a deal that could see Malta receiving oil shipments at a fixed price from Libya during a meeting between Prime Minister Joseph Muscat and his Libyan counterpart Ali Zeidan in Tripoli last month.
“There is a political agreement but we are still negotiating the details,” a government source told this newspaper.
Over the past few weeks, the tempo of discussions was hampered somewhat by continued instability in Libya and the Ramadan but sources said the Government was hopeful a deal could be reached by the end of the year.
Libyan sources said the Tripoli government was struggling on a number of fronts, not least the oil sector itself, where it has faced criticism related to the low production of oil.
“But the commitment has been made and they (the Libyan government) will make good on their word. Malta has assumed renewed importance for the Libyan government at this critical juncture, partly on the basis of its role during the revolution and partly because of the help the country needs from Europe on many fronts,” the source said.
Malta has assumed renewed importance for the Libyan government at this critical juncture
Talks on the agreement were reported last week by the influential news agency African Intelligence, which said that Mr Zeidan had agreed to deliver oil cargo at a fixed price in a bid to help reduce Malta’s energy bill.
“Zeidan seems to deploying a lot of oil diplomacy at present. He has already made similar offers to Egypt and Tunisia,” Africa Intelligence commented.
Tunisia, in fact, already benefits from delivery of 450,000 barrels of oil a month at preferential rates until the end of 2013 and 650,000 barrels of a month during 2014.
Egypt has also been offered a similar deal but talks are still under way.
The move forms part of a drive to curb the fuel bill of Malta’s ailing energy provider ahead of the planned conversion from oil to gas.
On that front, the Government is currently evaluating offers from 11 bidders who were shortlisted in the competitive process for the provision of a new gas-fired plant and the conversion of the existing BWSC power station to gas.
The Government is also in talks with Libya over oil exploration, an area where Malta has been struggling for years to reach some sort of arrangement on the so-called median line, which has seen both countries in a dispute over oil exploration territory.
Discussions in this area are more delicate and possibly far longer term.
However, following the overthrow of Muammar Gaddafi, the chances of striking an agreement appear more positive.
mmicallef@timesofmalta.com