Author: George Mangion - Senior Partner PKF Malta
Published on Business Today: 17th March 2022

It was a cold evening in late March 2014, when I managed to attend one of the enthusiastic political meetings following a landslide PL election result.  This was hosted by ex-prime minister Joseph Muscat and a large audience was tightly hosted in a cold hangar at Marsa Shipbuilding.

I had a burning question to ask whether the new “l-Aqwa Zmien” movement was seriously considering restarting oil and gas exploration.  I was keen to ascertain whether this maverick young firebrand had a policy to pursue a new round of calls offering offshore concessions for oil and gas exploration.

Luckily, I was given a chance to put my question to the prime minister elect.  With a smirk on his face, he gave me a stoic reply that he, as a party leader, will not hinder any attempts by ministers who may wish to venture further on this policy.

Malta, at that time had no major oil investor applying for an exploration and drilling license and hopes were not high that any US investor was being lured to continue the search for the black gold.  Geologist Peter Gatt queried why Malta has “given up” on oil and gas exploration when Israel, Cyprus, Egypt and Greece have been actively exploring and discovering oil and gas in the Mediterranean Sea over the past decade, with Israel now an exporter of gas.

The hiatus on exploration now runs into its tenth year.  During this period, staff at PKF had been attending international oil conferences in London and even made presentations abroad about the potential of our untapped Continental shelf acreage.

History shows that for the past years the Continental shelf department had been mothballed and dead as a dodo.  Surprise, surprise last week writing in Times of Malta, Joseph gave his candid opinion piece touching poignantly on the subject.  He pleads that “our Mediterranean Sea, for many years was considered as a source of problems rather than a sea of life and potential.

As Europe realises once again that it cannot depend on one source for most of its energy, it will now seek to look, albeit belatedly, at the Central Mediterranean and at our North African partners as some of the alternatives to reduce this dependency”.

Would you believe that following his unexplained resignation as prime minister in January 2020, there has been a change of heart.  He is today a cheerleader for Malta to be at the forefront of a vibrant oil and gas strategy. Regrettably, a decade of price volatility, strong resistance from climate change proponents and Libya instability, has undermined ambitious global upstream projects.

The ex-prime minister thinks such projects need to be given a new lease of life.  Is this a Damascene conversion?  A bit late in the day. Muscat boldly writes that “Malta needs to lead from the front. The faster roll-out of renewable energy projects in Malta is important if we want not only to meet our targets but also to act on energy supply from a security perspective”.  Oil and LNG price are currently hitting astronomical levels - due to the Ukraine war and uncertainty created by the Ukraine invasion and the high dependency on Russian hydrocarbon supply.

Muscat is a pragmatist and is now proposing Malta investing in another inter connector for gas with North Africa to reduce Russian dependency.  This is easier said than done, since in his own words “the significant Russian presence in Libya, alongside that of other foreign forces, will not help.

But it is clear that the stabilisation of our neighbour has now become even more important, if that was ever possible”.  Muscat laments that Malta’s energy future is entering a delicate phase so a mere10 days from Election Day (on 26th March), the electorate are not enthused as there is no mention on oil exploration in the elaborate 1000 point-PL manifest.  Be that as it may, it took Cyprus almost a decade since it discovered oil in the Aphrodite well to start monetising its worth.

It is fair to reflect that in the past 65 years our offshore acreage was extensively screened by seismic surveys and the Continental shelf department is endowed with priceless albeit untested, scientific data.

A legacy of seismic data and sporadic drilling tests was collected from various companies including BP, Texaco and Eni since the 50s.  Nostalgically, it was 1954 when the first onshore concession was awarded to a company called D’Arcy Exploration (BP) to drill an onshore well in Naxxar.

All attempts since then failed with some dry wells others with some oil and gas prospects but no commercial success followed albeit geologists affirm that our 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 rich Sicilian Vega oil fields to the north have an estimated resource of 1 billion barrels of oil in place, located offshore - only 20km away.  Needless to say, 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 highly prospective oil strike in our waters.  It is not rocket science that our offshore acreage geologically analogous to the Libyan Sirte Basin, appears to contain analogues similar to proven producing fields in Libya in addition to those in offshore Tunisia.  Four years ago, there were strong rumours that a National Oil Company was to be set up to help promote upstream business but so far the policy seemed to have been shelved.

As Shakespeare once wrote, there is a tide in the affairs of men, which taken at the flood, leads on to fortune; Omitted, all the voyage of their life is bound in shallows and in miseries.

Heeding Joseph Muscat’s words albeit somewhat late, will, if acted upon, grace us with prosperity as it did for other countries in eastern and central Mediterranean.

Author: George Mangion - Senior Partner PKF Malta
Published on Business Today: 17th March 2022
Get in touch: info@pkfmalta.com