Malta and Libya’s oil ‘waltz’

Malta and Libya’s oil ‘waltz’

Talks between Malta with Libya on contested offshore territorial claims have been likened to “a waltz, moving two steps forward and one step back” by the representative of a Canadian oil company.

Edwin Vella, the Maltese representative of Heritage Oil that was given a licence by Malta to conduct oil exploration on the Medina Bank in the south east, noted the dispute between both countries went as far back as the 1970s.

In March 2008, Libya had written to Heritage Oil warning the company not to do any drilling in Area 7, which the North African state claimed as its own. Heritage Oil had not yet started operations in Area 7 and Area 2 (which lies to the north of the disputed zone) where it was given a licence by the Maltese government to explore.

The issue was raised again on Wednesday when MaltaToday published a copy of the letter the Libyan Foreign Ministry had sent to Heritage Oil’s chief executive in March 2008. The same newspaper had divulged the contents of the letter two years ago.

“This is an ongoing saga and there is nothing new in the story that Libya had asked Heritage Oil not to do any work in the disputed area,” Mr Vella said.

In its annual report for 2009, the latest available on its website, Heritage Oil said it planned high impact exploration drilling for the fourth quarter of 2010 after acquiring previously available seismic data. The company estimated the area having a potential 500 million barrels of oil.

However, according to its Maltese representative, it is unlikely the company conducted any physical activity in the disputed area last year.

“They have an office in Malta, which I represent, but that is all,” he said, adding the Foreign Ministry had often said talks with Libya were ongoing.

“Negotiations resemble a waltz, moving two steps forward and one step back or the other way round,” Mr Vella said, adding the territorial dispute had to be resolved before any concrete developments could occur.

In the annual report, Heritage Oil reiterated its belief that the Libyan government’s claims were unfounded but the Maltese Foreign Ministry was more guarded in its response when asked about the matter.

A spokesman said Libya’s concerns related to an area to the east of the short boundary delineated by the International Court of Justice in 1985 after both countries sought judg­­ment on overlapping continental shelf claims.

“When claims overlap it is usual for the relative countries to issue notes regarding claims by other countries. Discussions have taken place including during the Mixed Commission meetings held in Malta and Tripoli even during the past year,” the spokesman said when asked what stage talks between Malta and Libya had reached. He did not give further details.

The sea to the south of Malta is deemed to offer big potential for oil and gas finds having similar characteristics to offshore oil fields in Libya.

In September, Leni Gas and Oil, which shares an oil exploration licence to the south with Mediterranean Oil & Gas, said it remained focused on assessing the viability of non-seismic surveys and acquiring additional seismic data ahead of starting to drill an exploratory well this year.

Both companies have a commitment to drill by July 2011. The companies estimate the area, which falls within the boundaries delineated by the ICJ, holds a potential of more than a billion barrels of oil.

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