Quest for oil – running up the greased pole

The opposition spokesman for international business was reported to have lambasted the prime minister’s attempts to promote the island overseas, tarnishing him as our travelling salesman.

This appellation may appear to have resonance, given that he has been out of Malta on many occasions flying the flag and attempting to attract foreign direct investment. Naturally business can only come our way if our political and business leaders forget their cosy desk and fly to niche markets to “sell” our attributes.

It is a worn out cliche that nobody owes us a living. The latest good news following our blond ambassador’s itinerary was his visit to Singapore. Here he signed agreements on energy, shipping and marine logistics giving services to the oil industry. Another interesting move was to attract interest from a financial services company named Six Capital Pte Ltd, itself a centre of excellence for foreign exchange (FX) trading and training.

SixCap intends to incorporate SIXCAP Financial Group Co. Ltd for developing Malta into a centre of excellence for FX training and trading for Southern Europe and North Africa and place suitable candidates into employment at SixCap’s Utility Trading Centres across the People’s Republic of China, India and the emerging markets in Asia.

Back to energy and we also read about various meetings in China to attract interest in gas exploration and related matters in the central Mediterranean. To continue on the theme of marketing there are no prizes for guessing that the effort by the energetic Dr Konrad Mizzi to make us form part of a future EU gas platform will generate extra revenue and possibly link supplies from the Levant to Northern European via future pipelines connecting gas user countries.

Can this come a moment too soon? Not really, we are still reeling under the melancholy of the latest dry well (styled Hagar Qim located close to Libyan waters in area 4) which was abandoned in early July after Genel Energy invested by taking over the concession from MOG. The official company announcement on July 4 solemnly said that the rig was instantly redirected to drill on the Sidi Moussa block off Morocco where Genel Energy has a working interest.

Tony Hayward, managing director of Genel Energy, was reported to say that the well was abandoned ahead of schedule simply because the drilling operation was so efficient. This is a mystery that begs an answer or possibly an independent inquiry, since previously a Genel spokesman was reported to say that exploratory drilling would last between 45-55 days.

The sheer abandonment is a stark affair – what went so wrong that the well was plugged only after six weeks? This and many other questions will never be answered as the directorate at the Continental Shelf in Floriana is rather secretive about issuing public announcements, only admitting it had placed a representative on the rig to supervise and protect Malta’s interest.

Hagar Qim is the first well since 2002 to be drilled and only Malta’s 13th in 60 years of oil exploration. Readers may ask what can the prime minister do now, when after so many years we have failed to attract a larger coterie of  investors to explore our vast acreage exceeding 70,000 square kilometres.

Can the elusive travelling salesman come to our rescue and shake up the directorate for Continental Shelf, itself a small team of three officials not reputed to be funded for any extensive travelling or marketing. Talk to Dr Gatt, a trained and independent geologist about the subject and he is emotional about the dire attempts so far by past and present administrations to intensify the quest for oil when it is ironic that the central Mediterranean is so rich in deposits. In a local newspaper Dr Gatt is quoted to estimate that if Malta were to adopt the same intensity as Italy it should have drilled around 200 wells during the period (a pitiful 13 wells speaks volumes about our chances).

In his frank opinion, it is this poor drilling record that may very well be the reason why Malta has failed to strike oil and gas, unlike its neighbours. Readers may well remember reading last year how the seismic data so precious to attract prospective investors was found dumped and abandoned in a secluded garage... unsung and unheard. It is a mystery how such vital evidence, painstakingly collected over 60 years of drilling, was unceremoniously discarded and not fully utilized.

Could this be a policy of acquiescence for our neighbours, given that they all claim a large part of our offshore acreage? Surely our blond travelling salesman will find it hard to persuade the magnates of Singaporean, Russian, American or Chinese investors to risk capital in an uncharted territory without a detailed National Geological Survey.

Again Dr Gatt lamented the lack of a national institution to survey the country’s geology, which left gaping holes of information that kept oil companies away. The formation of a National Oil Company was promised in last year ‘s budget but so far there has been a complete silence on this initiative and the 2015 budget omits any allocation of funds to recruit top experts to man this vital arsenal.

It is sour grapes to see both Cyprus and Israel having succeeded to discover rich gas deposits in the eastern Mediterranean. The days when secrecy towards our data room and uncharted strategy behind closed doors when requested by researchers is over and in the words of Dr Gatt this  is incomprehensible, considering how other countries willingly make their geological data available to researchers.

A case in point is the geological data extracted when the Gozo oil well Madonna taż-Żejt was being drilled in 1998. One may recall the heading in The Times of Malta on June 19 coming a few days before the  result of drilling at Hagar Qim was about to be announced. This read in bold print that oil investors were biding their time till disputes are solved.

In my opinion this is a lame excuse and does not justify the dearth of investment but readers may well conclude that some stakeholders do have other axes to grind. The article in TOM continues to placate us by saying:- “territorial disputes hanging over parts of Maltese oil licensing areas may be deterring actual investment, but there is still no shortage of interest from oil companies”.

If there are so many gate crashers at the Directorate of the Continental Shelf waving fat cheque books for new production sharing licences then why is this a state secret? It is so condescending to hear that after a dearth of drilling activity over the past 13 years we still read about official statements in the media telling us that “Neighbouring states have registered claims over part of Malta’s 76,000 sq. km acreage: Italy to the northwest and northeast, Tunisia to the west and Libya to the south.”

Therefore, apart from area three and Area Four (the latter owned by Genel) there are other areas that are affected by overlapping interests. Why in a span of 27 years have we not challenged such claims or at least succeeded to reach joint-drilling agreements?

The man in the street has by now got so fed up reading about failed attempts that hope of a successful discovery has faded completely and melancholy set in. One may compare this to failed attempts by vigilantes trying to go up the greased pole.

It is no consolation to read comments from experts that Areas 2 and 4 show technically compelling evidence of a geology which is synonymous with other certain discoveries in Northern Africa. Really and truly we can only account for 13 dry wells dug in 60 years and this dismal performance may break our resolve to join the list of successful countries in the oil rich Mediterranean basin.

To quote the success registered by Italy onshore and offshore one refers to Assomineraria (Italy’s oil and gas producer association). It estimates private investment has exceeded 1 billion euros in exploration and production in 10 years.

Back home, let us mention another example of licence holder Cairn Energy. This company has been licensed to conduct a seismic test in area 3 in the north close to the lucrative Vega oil fields but only recently is reported to have switched to another prime location and go drill in offshore Spain next year. There it sees geological similarities with Israeli waters, home to two of the largest offshore gas fields found in the past decade. Finally our destiny dictates – oil and gas everywhere but not a barrel in sight. Can the flying salesman come to the rescue?