An exploratory well is about to be drilled 130km south of Malta with results due in July, Transport Minister Joe Mizzi said yesterday, as he reaffirmed his belief there was petroleum in commercial quantities.
The government will soon be conducting seismic surveys in areas in the north of Malta, which has been overlooked in the past years.
Speaking during The Economist Business Roundtable yesterday, Mr Mizzi said if the results of these studies are positive, the government would issue licences for exploration in these areas.
Though in the past years there have been numerous attempts to find commercially viable gas and oil, this will be the first time a well is being drilled in deep waters.
The government is offering a number of incentives to companies to drill in ‘deep water’, with a 50 per cent allowance to recoup their investment if oil or gas were found.
Albert Caruana – director general at the Continental Shelf Department – explained there are two forms of agreement for licensing in Malta, either through an exploration agreement or a production-sharing contract.
Companies normally first enter into an exploration agreement to carry out seismic exploration and evaluate the acreage and if the results are positive, then they convert to a production-sharing contract.
I believe there is petroleum in commercial quantities
Exploration may have been delayed in the past because of overlapping territorial claims, but Mr Caruana stressed that the government’s decision to opt for joint activity with Malta’s neighbours could solve the impasse without prejudicing sovereign rights.
Another speaker at the conference was Tony Hayward, the CEO of Genel, which acquired a 75 per cent working interest in Mediterranean Oil & Gas MOG’s wholly owned subsidiary, Phoenicia Energy, which currently holds the concession for exploration in Malta Offshore Area 4, which is about to begin.
Mr Hayward, who was the CEO of BP from 2007 to 2010, explained that the presence of 100 years’ supply of shale gas in the US meant this would establish the price benchmark around the world of around $10-11 per million British thermal unit (BTU). He said Europe’s energy policy was in disarray with gas plants being closed in a number of countries and being replaced by coal, which had become much cheaper.
With oil prices fairly stable, the returns were at historic lows, meaning that energy companies were under considerable pressure to reduce their capital expenditure.
“It is very hard to attract capital, and investors need greater security and stability before they will make a long-term commitment, which oil and gas is,” he said.
Energy Minister Konrad Mizzi spoke about the local energy sector and the plans for generation, stressing that the regulatory authorities had this week concluded that plans for the floating LNG storage at Delimara were safe.
He also outlined some of the benefits of gas-powered electricity, such as 80 per cent less nitrous oxide, no sulphur and a million tonnes less of carbon dioxide emissions every year.
Mr Mizzi also said that Enemalta’s partnership with China, which is making a significant cash injection, would give it the chance to get into regional projects and become an international player.
EU underused its own clout – Muscat
The eurozone economic crisis and the general lack of political will saw Europe underuse its own clout, according to Prime Minister Joseph Muscat.
“It has lacked the self-confidence to push through.
“It’s as if Europe remained at the starting block, paralysed by itself,” Dr Muscat said in his opening keynote speech at The Economist Business Roundtable with the Government of Malta.
Europe has what it takes to exert hard and soft power around the world and any attempts to suggest otherwise would either be doing injustice to its successes or focusing on a narrow definition of power, Dr Muscat said.
Additionally, the Prime Minister said the EU has to remain open to enlargement, believing it is a process that both reinforces and reviews it.
As for the immigration issue, Dr Muscat extended his plea to the international community to do more in the face of the ongoing situation, which, he said, “remains the tragic evidence of our global failures”.
Former Italian prime minister Enrico Letta, one of the high-profile speakers at the two-day conference, also mentioned the issue of immigration and the need for the EU to help out with the crisis.
For the EU to progress, all member states have to pull the same rope and participate actively to solve each other’s problems.
Nationalist Party deputy leader Mario de Marco said more efforts were needed in Europe – and in Malta – to breed a new generation of entrepreneurs: a generation that is not afraid of taking risks and failing.
Dr de Marco urged the Maltese government to take the lead in reigniting the Euro-Med process and the Union for the Mediterranean, which seem to have lost steam for a variety of geo-political and economic reasons.