Updated | Castille requests clarifications from Heritage Oil on Libyan 'cease and desist'

Castille has contacted Heritage Oil Corporation for clarifications regarding a ‘cease and desist’ letter the oil exploration company received from the Libyan government in 2008.

The request comes hot on the heels of MaltaToday’s publication of stern correspondence issued by the Great Socialist People’s Libyan Arab Jamahiriya to the oil exploration company in 2008 warning it not to conduct operations in a maritime area which Libya claims as part of its own continental shelf.

The claim directly threatens Malta’s own declared maritime territorial integrity, evidenced by the fact that the Government had only just ‘ceded’ oil exploration rights over the same disputed territory in question.

The correspondence - dated on March 2008, a week before the general election, and only three months after Maltasigned its contract with Heritage Oil - reveals the reason behind the apparent slowdown in offshore oil exploration, following the Government’s announcement of a contract with Heritage Oil Corporation in 2007.

Libya’s unequivocal threat was made in a letter addressed to Mr Anthony Buckingham, Chief Executive Officer of Heritage, and signed by Dr Shakri Mohamed Ghanem of the Jamahiriya’s Foreign Ministry, on 3 March 2008.

MaltaToday is also informed that multinational oil exploration companies, such as Heritage Oil, are still bewildered by attempts by the Maltese Government to give the impression that there is no on-going dispute with the Libyan government.

This attitude, sources said, has led to widespread scepticism among multinational oil exploration companies that the Maltese Government is not giving an accurate picture of its oil exploration rights in the area in question.

This letter to Oil Heritage Corporation is being made public here for the first time in 32 months. The full text is as follows:

 “Dear Sir – with reference to the press release announcing the conclusion of the Production Sharing Contract between your company and the Maltese Government to acquire an offshore Exploration Area to the south east of Malta, referred to by Malta as Area (7), the National Oil Corporation would like to draw your kind attention to the fact that the area which you have been awarded to carry out your petroleum activities lies within the Libyan continental shelf. Block NC 146 of that area, which is under contact with Sirte Gulf Oil Company.

 “We believe that the activities to be carried out by your affiliated company Heritage Oil international Malta Ltd and/or any partners or affiliates under the contract referred to above, shall constitute a violation of the sovereign rights of the Great Socialist People’s Libyan Arab Jamahirya and we hereby demand that you immediately refrain from any activities in the above specified area…”

“We hold you responsible under Libyan and international law for any activities you may conduct in that area and we reserve all rights to act both de facto and de jure to protect our interest in the Great Socialist People’s Libyan Arab Jamahiriya territories.”

Who owns Area 7?

The specified ‘Area 7’ covers 8,778 square kilometres to the south-east of Malta, and is one of two areas for which Malta awarded Heritage Oil an exploration and production licence in 2007.The contract was signed by former Minister for Resources and the Infrastructure, Ninu Zammit.

The principal financial obligations of this contract for Heritage are: 

  1. A signature bonus of US$2 million to be paid to the Government on signing of the contract;
  2. Expenditure of at least US$ 22.0 million in the first three years of the contract;
  3. Annual rentals on a rising scale payable to the Government starting at US$ 240,000 per year;
  4. Annual administration fee of US$ 100,000, and ;
  5. Annual scholarship and training contributions of US$ 100,000.

The work programme for the first three years consists mainly of:

  1. A detailing seismic survey of the two areas awarded;
  2. From the date of signature, drilling at least one firm well within three years years.

Regarding the work programme, one aspect – the seismic survey – was duly carried out, and ascertained that Area 7 offers “a variety of prospects in Lower Eocene and Cretaceous carbonates, that are recognised to be major hydrocarbon producing plays in the central part of the Mediterranean.”

The Heritage survey also specified that “the licenses are under-explored, having only one well drilled in 1980 to a depth of 1,225 metres, which failed to reach the target horizons that are located at depths of 1,500 to 4,000 metres, and in water depths of only 200 to 400 metres.”

However, the second part of the work programme – i.e., that at least one firm well would be drilled by 2011 – appears to have stalled, and the deadline for its implementation has only just expired.

Progress on this aspect had been openly questioned in Parliament by Labour whip Joe Mizzi in November 2008 –  a full seven months after receipt of the letter from Libya’s foreign ministry – but in its reply to Mizzi’s statement, the Oil Exploration Department claimed only that “the Government is doing every effort to promote and sustain exploration activity in offshore Malta, so much so that the drilling of two offshore wells is planned by 2011.”

No mention was ever made of the fact that one of the two areas ceded to Heritage under contract by the government of Malta in 2008, is the subject of an ongoing territorial dispute with Libya.

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duncan abela
One cannot blame Libya for taking action to protect its alleged rights. It is the sacred duty of every Government to safeguard and protect its national interests and to do so whether it is the Maltese or Libyan government . I thought the matter of the median line had been resolved but it seems this is not completely so. If Malta has rights over the area there are more diplomatic ways of asserting them rather than testing the waters through dubious concessions to some oil drilling consortium. What is interesting and demands answers is whether the Maltese government was aware of the letter sent by the Libyan National Oil Company to the heritage consortium and if it knew how did it react. In a way the Libyans were being prudent and diplomatic in not muddying the waters at national level. However in the same vein I ask have we the done the same with third parties who may have transgressed or impinged on our territorial rights or our territorial environmental safety. In particular I ask have rogatory or cease and desist or compensation request letters been sent by our government (i) To British Petroleum holding them responsible and asking for guarantees re potential environmental damage which their deep sea drilling in waters contiguous to ours can cause us. (ii) Have we issued a cease and desist or compensation request letter to the consortium which laid a gas pipeline between Libya and Italy passing through our continental shelf and are currently managing the gas pipeline link.
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Paul Sammut
''Castille has contacted Heritage Oil Corporation for clarifications regarding a ‘cease and desist’ letter...'' - This is ludicrous. Do those at Castille want us to believe that they were not aware of what was going on? If so they were outright incompetent, as usual. Or is there more to it?
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Alex Grech
The Libyans opposed and halted our oil exploration even when it was on our own land, let alone if it’s in offshore waters between the 2 countries! Libya own our oil!
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WE.ve had so many Maltese diplomats, foreign affairs "specialists", others who "excelled" in politics by (persuation)! writing articles and books" tal-habbaziz" and no one of them was capable of gaining one Iota for Malta and the Maltese? I still remember when Mintoff took on Libya and asserted our rights,( whilst Fenech Adami and Co played the fiddle behind Maltese backs); this is the stuff the PN "patriots"are made off. Yes let us honour them with " Ugieh ir-republika" because, their only one legacy is that of having have sucked the marrow from our bones, and have (at the same time) riddled Malta with 6 billion of debt, which will take decades (of pain) for our children (not theirs) to heal!
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This is geting rediculus as there is no other nation that is subdude by this regime, this dates back to the 80's as we have had the same dispute over in Madina Bank. Mintoff took the Libyans to court and won, some 16min in terms of navigation. Malta should stand it's rights to Drill now that it's be been proven that the Hydrocarbons do exits, and not too far off Bouri Field ENI Gas is more then likelly drilling in this disputed resouvour "Lateral drilling" horizontal The fact of the matter is simply playing with time, as soon they deplite the resevour then they would hand the rights to Malta to drill. My gutt feeling
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To Citizen X: These projects to make the Biofuels in Malta were published in the European Press (following the application to Malta Government some time last year-so it is read. The production of biofuels from Non-Food based sources of Biomass - of which these projects are a part - is heralded as part of the drive by the EU (European Union) to off-set the use of fossil fuels by using biofuels. The raw materials used are stated as being derived from biomass of non-food crop origin. This is a process that is currently being rolled out in Finland Sweden Holland the UK VietNam the USA/Canada and India/Pakistan Africa and elsewhere by the British and US Company. An Environmental Impact Statement is being followed through using the extensive data from the EU. As I read the data the project is one that operates in water and uses traditional water-based mixing plant and tanks to break down the biomass to the sugars which are then converted to the biofuels - in this case bioethanol. The process is compact, uses no imported water, is self-supplied in its own electricity and produces no smell, smoke or discharges to the air - no dioxins are liberated thus. In the process description the raw material can be any biomass including sea-weed for which the company has rights to an established Israeli development to use harvested sea-weeds that can be grown on land in shallow lagoons typical to a salt-pan in a desert. You ask what the Target Market is for the fuel! Bioethanol is purely a name for the transport fuel Ethanol derived from Biomass. The fuel is a direct replacement for using gasoline/petrol albeit it has an energy quotient of 70% that of the latter. AS I read it the first plant will produce 87 Million litres of Bioethanol, and to put that in perspective that would meet a 10% replacement of gasoline/petrol in Malta. The second plant will produce over 2 times this amount and so in theory both plants could provide 30% of the fuel needed to replace gasoline/petrol in Malta. (There is still the option of a third plant for Malta which would make another fuel to replace Diesel from oil and that is still understood to be in the offing. The fuels can be used in Malta - the obvious choice - or exported to create revenue to the Islands of Malta and Gozo! The International Demand for Bioethanol is in excess of 200 Billion litres per year by 2020! So producing 400 million litres in Malta is chicken-feed in the overall context – although for Malta it would be 50% of its needs for gasoline replacement. Adding to this further: currently with the age of most vehicles in the EU (or indeed Malta) the suggested maximum substitution of Ethanol for petrol/gasoline is around 10%. But with the new fleet of cars arriving from Sweden (SAAB/Volvo) from the UK (Ford/Vauxhall/Nissan/Honda) from Germany (Mercedes/BMW/Audi/VW-etc) from Japan (Nissan/Honda-etc) and increasingly from China all vehicles manufactured from 1997 can use any mixture of Bioethanol/gasoline from a neat 97% Bioethanol blended to 3% gasoline to a 5% Bioethanol blended to 95% gasoline. You should not be surprised therefore to know that in Malta you are already using a 3% Bioethanol blend with 97% gasoline. The issue is that this Bioethanol is imported in to the European Union from the USA and Brazil rather than made in the EU! The effect of this is that the Brazilian Economy subsidises the export of Bioethanol to the EU and then the Brazilian Government uses food crops to make Ethanol and receives €00-15 cents for each litre that is imported to the EU. The same happens with the USA (where they use Sweet Corn) and Canada (where they use Wheat). I think that this is a travesty of errors by the EU and a remnant of open-trade policy which is still being closed up. The EU has not been as quick to develop its market for biofuels so that as a consequence other countries are moving in. The slow-ness of the EU countries to react has meant that they have also gone for food crops first and this has been the cause of the massive food price hikes we saw between 3 and 4 years ago that caused riots in Mexico Italy and China! In response the French and Spanish have developed a Bioethanol economy based upon wheat but the droughts across SW Europe and Floods in the East have seen crops fall dramatically. Poland is trying to keep up and so is the Ukraine. More recently the whole of the Pakistan Wheat Crop was ruined by floods and now they are importing it at premium rates (ie 50% above last year's high prices.) And let's also think about Australia it has had half of its wheat crop ruined by floods and drought just this year! Now even Russia is talking of conserving its wheat crops. Using food crops is not the way forward and subsidisng foreign Countries to produce it is a nonsense - do you not agree? We read that this company can use Sea Weed (which is an algae) for making this Bioethanol. Malta could be of great use to this venture therefore as it sits at the heart of the Mediterranean. We in Europe can make all of our transport fuels from Green Sources without using Food Crops. The real crux of the issue which always appears in these discussions is will the price of the fuels produced from these Green sources be cheaper? The answer is yes! It costs around €00—30 cents to make 1 litre of Bioethanol and if it were taxed at the same rate as other fuels it could be sold for €00—60 cents per litre. We need to get over the 30% substitution values first before the difference is noted in the retail pricing at 15% substitution. However as blends rise above 50% look at the difference yourselfand you will see that a litre of fuel that currently trades at €1—20 per litre will drop to €00—90 per litre! That I suggest is what you would be looking for. Malta can be made self-sufficient in transportation fuels and if I am not incorrect these projects from the British Company will be the start of this.
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I think it is about time that more on this case come to light. If I recall well studying the ECJ case Libya Vs Malta 1982-1985 with regards to the dispute on the median line, block 7 whihc had been at that time already allocated as part of Malta's concessions north east lat/lon 35'/15.50' aprox was part of the disputed area already at that time. Also if I recall well following the intensive surveys including satelite imagery and investigationsa and after the ECJ tried to come up with a fair judgement by applying Int territorialk and boudry laws based on a 200 mile radius, Block 7 seemned to fall , or at least a large part of it in Libyan territory. It is therefore strange how the Gov contracted this area to Heritage. It is also strange that we have not heard of nay formal complaints from Heritage on the case especially if they had paid 2m up front for the contract. The other question is, If this area is in fact of Libya, does this mean that Heritage in fact conducted surveys obtaining positive results for Libya instead for Malta. I am therefore aroused to ask , what are the implications. stinking Slick
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Paul Sammut
@Tarcisio Mifsud Have we forgotten that nations do not have friends but interests. Still, just because Libya looks after her own interest this does not make her an enemy. [Which countries give something for nothing?] The issue is that unlike previous Labour governments our prime minister is not competent in safeguarding the country's interests. The LNG pipeline is a very good example. Perhaps some investigative journalism concerning the subject would disclose what made the government fail to take advantage of such an opportune situation or rather if it actually bungled the whole afair.
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Charroll Can you tell us more about 'Bioffuel plants in Malta as a major inward investment of over €270 million during the next three years.' What is the target market? What raw materials will they be using? How much space will they require? is there an environmental impact? The statement needs to be qualified and more information should be provided - we leave vague statements for castille.
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@Joe South I am referring to solar energy, not just solar water heaters but solar panels. Another choice could be wind energy. We shouldn't focus ONLY on non-renewable energy. It is not feasible any more.
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Guys - don't forget that you live in a country that cannot even keep electricity running without being attacked. Can you image if we piss one of our neighbors off? Good thing we have done some refurbishment on our prehistoric temples - in case we are reduced back to the stone age again. And get it off your head that someone would come to the rescue. Why on earth would they. Maltese have a very twisted idea of why they are in the EU. Keep it real and stay humble. We are risking to loose everything we have worked for, so our greedy political class can get its hands on some oil - and believe me - they will get the oil for themselves and their sons - like we don't have enough evidence of that already.
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Alfred Galea
Ianzahra, what kind of "green" technology are you refering to?? Charroll, what makes you think that Bioethanol will work in Malta if it doesn't work in the US with all that corn?
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Mark Fenech
And politicians call the Libyans as our friends. Having worked with them for many years, I can assure you that they are anything except our friends. Politicians should speak clearly with the people. We should never have allowed the Libyans and the Italians to pass an LNG pipeline on Maltese continental shelf, and this without any sort of compensation. For every cent they gave us in the past, they have enjoyed a very good return by one way or another.
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Words that stand out in the article 'hot in the heels' and 2007, 2008. Has anyone noticed we are in 2011. It would be useful to know what our tax money is being used for. Oil just off Blue Grotto? Very convenient - this is even better than finding oil in Gozo. Wonder if there is some near the power stations - then we run run a pipe straight down into the ground. God has truly down miraculous things with this country.
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Ianzahara is absolutely right here. But he is not aware of the fact that a British Company is shortly to start work on developing two major Bioffuel plants in Malta as a major inward investment of over €270 million during the next three years. These are Green technologies and will make the transport fuel Bioethanol in two plants. The first will produce over 85 million litres of fuel which will be up and running by 2013. The second plant will produce around twice this and be up and running during 2014. As well as providing over 30% of the fuel needed for cars these will also provide over 400 permanent jobs and reduce the costs of fuel in Malta. So let's hear more of this and see when Malta Enterprise announces this development.
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We shouldn't invest all that time and money on this type of energy as it is not feasible. Why not invest on green technology? Sources which will last forever and have cheap running costs,
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Where is the support and assistance of oour so called EU Brothers?
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To think of it ....That's what real friends are for !!!!