Chasing after our black gold

Geologist Peter Gatt recently proudly stated that our continental shelf is the country’s largest and most valuable asset, with a vast area that may potentially include hydrocarbon and other mineral resources worth several billion euros.

Similarly Tony Hayward, CEO of Genel, a company that in a joint venture with license holder MOG, is drilling an offshore well in the south near the Hagar Qim concession, is equally confident and states that interpretation of seismic data is promising.

Speaking at an Economist Roundtable conference, he gauged the chances of a discovery as one in four. But then why is there no other active licensee in the vast acreage of 77,000 square kilometres?

In the words of Dr Gatt, a promising offshore license since end 2007 issued to Heritage Oil along Malta’s eastern continental shelf (Areas 2 and 7) remains undrilled. He laments the cloud of official secrecy on every aspect of oil exploration data, which in his own words is unparalleled in the rest of Europe.

Trying to ask the Continental shelf directorate for data on geological research is like asking President Obama to give up the secret code reserved for firing the nuclear arsenal. Attempts by PKF to elicit joint participation at international events both under the PN administration, and to a lesser extent under the PL regime, have been greeted with aversion and an attitude of ‘don’t call us we call you’. One feels lost almost like Dr Livingstone frantically looking for the Victoria Falls after accidentally breaking his compass!

Trying to solve this mystery, I attended one of the public discussion meetings held by the prime minister under a tent pitched in the old Marsa Shipbuilding yard. When I asked about the dearth of drilling activity, he promptly answered that some of the areas in our continental shelf are contested by neighbours but dutifully acknowledged that more needs to be done.

Certainly the prime minister is cautious not to raise expectations of a windfall within his cabinet, admitting that over the past 60 years we only drilled 12 wells - all turning out to be dry or with just a small show of oil and gas. Yet Italy tested over 4,000 wells during the same period.

The attempts to persuade neighboring countries to settle for joint exploration are ongoing, albeit slow, but a memorandum of understanding was signed with two counties. In hindsight, 60 years seems like an eternity to reach a joint exploration agreement.

In the meantime, a new seismic study is planned offshore, on a site facing Sicily, but other than that, there is no news in the media about investors applying for licenses. On another occasion, during the AGM of Chamber of Commerce addressed by the energy minister, I asked him why EneMalta, as a heavy user of oil, never invested in its own seismic studies to be marketed internationally. These could serve to attract oil companies to drill. He replied that exploration falls under another ministry.

In fact, yours truly has been calling on Enemalta to participate in international events organized by PKF for two years, in order to promote the island's acreage and this was always politely refused. Pressed to state why the government has no open policy to promote the continental shelf as compared to Cyprus and Israel - these countries have become the world’s newest oil and gas frontier exploration areas in the eastern Mediterranean - Dr Konrad Mizzi smartly replied that in the future a gas pipe line will link the island with North Africa producing wells.

In the meantime, the government succeeded in attracting the attention of EU ministers to a conference focused on making Malta a hub for gas supplies to Northern Europe, planned to take place in June. This all looks hunky-dory but it will take another decade, and several millions, to materialize so in the interim why are we dragging our feet? Can Malta become a potential exporter of its own oil or gas and in the next six to eight years start reducing its recurring annual financial deficits?

The answer is not easy, given that the subject is taboo, especially considering how unscrupulous politicians used the subject to wet voters’ appetite weeks prior to general elections. Conspicuously, the man in the street expects the new company, promised at the last budget, to take over the responsibility for managing an exploration directorate and make it a priority to set up a proper investment strategy. Otherwise, voters ask, who is to account for lost opportunities?

In this context it is encouraging to read that PKF has teamed up with Oil Barrel Limited, which is the UK’s leading investment show taking place in central London on the 7 May. The show is now in its 6th year and attracts over 250 attendees where investors meet with top executives in various sectors, including oil and gas exploration and ancillary industries. It also gives investors unique insights on country specific opportunities.

PKF will again be inviting companies specializing in logistics, representatives of the Continental Shelf directorate and this time around hope Enemalta sends its team in the oil procurement division to participate and actively contribute to the development of the industry.

We also remind readers that this month Mediterranean Oil and Gas Plc (MOG), as the licence holders, starts to drill for oil and gas in the Area 4 and first indications will be known in two months. The prospects look promising, such that it is now apparent that this part of offshore site, which is geologically analogous to the Sirte Basin, contains 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/Paleocence sequence. The survey has produced imaging of the Cretaceous and Jurassic sequences, enabling several large leads to be defined at this stratigraphic level.  But can we rest on our laurels? Not really because there is no guarantee that oil can be discovered in Area 4, which means the government must quickly move to attract move investors to drill simultaneously in other unexplored areas. The mandarins at Castille need to place more irons in the fire!

It is equally heartwarming to recall how both Cyprus and Israel discovered huge deposits of natural gas in the Levant basin and furtively kindled hopes in other Mediterranean islands to tap this valuable resource. On its part, Cyprus appears to be on track to further expand its exploration efforts, offering a possible solution to an economy weighed down by its own debt and the country’s weak banks saddled with a close connection to Greece’s own stagnated economy.

Quoting Reuters, the Levant basin offers Cyprus access to an estimated 5.1 trillion cubic feet of natural gas, which enables it to be able to meet domestic needs by 2017 and earn export revenue by 2019. The island has already received 15 bids from companies or consortiums for nine offshore blocks along the south of the island in an area where a significant natural gas discovery was reported late last year.

According to the Cypriot minister for commerce, industry and tourism, the vast reserves of natural gas discovered is a watershed for the island’s economy. But of course the promotion of its available acreage was done in a professional manner such that it attracted attention of Italy’s ENI, France’s Total, Malaysia’s Petronas and Russia’s Novatek. Of course the money invested by the Cyprus oil agency to attract new business has been manifestly rewarding since according to the U.S. Geological Survey, it has estimated over 100 trillion cubic feet of reserves are up for grabs.

This is a huge treasure chest almost equal to the world’s total annual consumption of natural gas discoveries. Back in Malta, it is a chicken and egg situation. Can we continue buying LNG in floating tankers, which have created so much controversy among some MEPs on whether it is safe to berth such monsters permanently inside our harbours, or try to find an alternative source in our backyard, even if we have to reach a compromise like Cyprus and Israel have? Logically the oil and gas conference planned by PKF will be an ideal platform to start the ball rolling on how to chart our oil exploration and attract foreign direct investment in the near future. Will the authorities wake up this time and smell the coffee and forget their ‘don’t call us we’ll call you’ attitude?

Interested companies wishing to attend or sponsor the London conference can register with marketing co-ordinator Kinga Warda at email [email protected]