It was more than 60 years ago that the government of the day embarked on a drive to sell Malta's offshore acreage to oil companies with a view to encouraging investors to prospect for oil and gas. In 1954, an unsuccessful onshore concession was awarded to a company called D'Arcy Exploration (BP) to drill a well in Naxxar. All attempts since then have failed, a few with dry wells and others with some oil and gas prospects but not commercially viable. However, official circles have revealed that the main source rock for the oil is expected to be rich in the organic Streppenosa oil shale unit which is designated world class in its prolific oil generating capabilities. No wonder the offshore Sicily Vega oil field, with an estimated resource of one billion barrels of oil, is only 20km away from the northern border of the latest zone in Malta's exploration efforts.
Experts predict that the proximity of similar concessions and similarity in geology to the producing basins of Tunisia and Sicily lend support to the theory that oil strikes for Malta cannot be excluded. The "intra-basin" ridge trend offers a new and enormous potential of an oil strike in our waters. In 2005, Mediterranean Oil and Gas (MOG), which was granted a licence to explore for oil and gas, had commissioned a specialist operator to carry out a seismic survey and interpret an extensive long-offset 3D view of the area which looks promising (yet no announcement has so far been officially made). It is undisputed that this part of offshore site is geologically analogous to the Libyan Sirte Basin, and appears to contain analogues to proven producing fields in Libya in addition to those offshore Tunisia.
Specifically, the experts have identified a portfolio of prospects in the Lower Eocene/Palaeocene sequence. For the first time, the powerful scientific survey has allowed imaging of the Cretaceous and Jurassic sequences, enabling several large leads to be defined at this stratigraphic level. In 2014, Dr John Hurst (COO for Genel) said: "We are delighted to have reached agreement to farm in the Area 4 Block Offshore Malta, a licence with considerable exploration potential being geologically similar to known producing areas nearby in Libya and offshore Tunisia." Genel bought the concession from MOG and started drilling but after a few weeks packed up saying that no oil had been found. No government comment followed
However, Dr Peter Gatt, a qualified geologist with years of experience in this sector had conducted his own study consisting of a detailed geological analysis of the Malta platform. His study focused on the analysis of rock samples from six exploratory wells drilled in the Maltese platform by oil corporations British Petroleum, Total and Shell, with some information dating back to 1956. So, can we ignore the commercial opportunities that have evaded us in the past? Certainly not, and it is debatable how an ex-general manager of a local soft drink bottling plant has been appointed chairperson of a national oil company (NOC).
Perhaps the penny has dropped and hopefully the NOC armed with adequate resources and technical advisers will move fast to exploit the opportunities which so far have eluded us. By comparison, Malta's intellectual assets in this sector are very thin on the ground with no updated seismic research. This is a pity. Such research is a prerequisite to attract potential investors with deep pockets to drill in continental shelf. The subject of oil and gas has been associated with political spin prior to each election to warm the hearts of voters and now there is this feeling of déjà vu.
But not all is doom and gloom. Following the last election, the Prime Minister appointed Joe Mizzi as energy minister responsible for this sector. His recent announcement that an application for permits to link Malta's future gas network grid to Gela in Sicily has been well received. This gas pipe will eventually link us to the rest of Europe. The government has announced that the basic design and route study were recently completed and the environmental studies will begin mid-2018, following a public call for tenders which will be completed in 2019. If everything goes according to plan, a marine survey of the offshore route will also be carried out in 2018. It will be followed by the front-end engineering design study required for the preparation of a tender for the construction and laying of the pipeline.
The government is in the process of applying for EU funding for the aforementioned studies, which are estimated to cost €8 million. In this context, it is encouraging to note that PKF has over the past years teamed up with Master Investor, the UK's leading oil and gas investment show held each year in central London, to attract investors to Malta. The show is now in its 15th year and attracts over 2,500 visitors where investors meet top executives in various sectors including oil and gas exploration and ancillary industries. It also gives unique insights on country specific opportunities, but now that NOC is operational, more investment promotion events need to be planned, continuing on the marketing pioneered by PKF.
Four years ago, the chairman of The Malta Council for Science and Technology called for a geological unit to be set up to carry out research on Malta's Continental platform and "make Malta attractive in terms of oil exploration and not just leave things to chance as we have done over the past 50 years". Even so, drilling in territorial boundaries can only gather pace if and when bilateral agreements with neighbouring countries are signed. With not a drop of oil or a cubic metre of gas, the island finds small comfort in the fact that it is located in a Mediterranean basin surrounded by rich hydrocarbon sites discovered by Italy, Tunisia, Libya and Greek concessions. Perhaps one can console oneself that scientifically proven assessments suggest good prospects in offshore areas close to Sirte in the south, but this is all pie in the sky.
With no oil revenues since Independence, successive governments had to upgrade the electricity generation and distribution infrastructure by buying oil at market rates. Can a stronger political effort be employed to persuade neighbouring countries to concede joint drilling in disputed areas? Will China be attracted to step in knowing that it invested so heavily in African energy sources? Observers say that apart from disputed areas, there is ample acreage which is not contested. Malta has the potential to become a "mini North Sea" if NOC succeeds to restart oil and gas exploration in earnest. To conclude, one hopes that Joe Mizzi the energy minister will lead us to the promised land of milk and honey and quickly set up a committee of experts to run NOC. Only thus can we rightfully claim what has been eluding us for the past 60 years.
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Mr Mangion is a partner in PKF an audit and business advisory firm.