Oil drillers seek injunction against government

Australian oil drillers Pancontinental Oil & Gas are seeking an injunction against the Maltese government, saying Malta started a bidding round for exploration blocks over offshore areas included in their exploration study agreement.

Pancontinental and Sun Resources had been granted an exploration study agreement over an area off Malta which was subsequently the scene of a dispute between Malta and Libya.

Pancontinental said it was unable to explore in the area due to the dispute, hence the force majeure.

The joint venture was in negotiations with the government over an extension to the exploration agreement, and believed substantial process was being made at a meeting in July 2010.

However Pancontinental alleges the Maltese government started a bidding round from interested companies for the grant of petroleum rights over certain offshore areas, including parts of the original exploration agreement.

Pancontinental said pleas for mediation with the government fell on deaf ears, hence the need for the injunction.
The joint venture has held the area in question since 2001. 

In 2008 further studies in the zones had to be postponed by six months on the request of the Maltese government until a dispute with Libya was resolved.

"We have had disappointments during the year, of which difficulty with our Malta project is the most prominent. We are currently making legal representations to the Government of Malta to secure the licences for the project. Regardless of the outcome, any activity here is likely to be some time in the future, due to the absence of a border resolution between Malta and Libya," said Henry Kennedy, Pancontinental chairman, in the 2010 annual report for the company.

Boundary discussions between Malta, Libya and Tunisia, were announced in 2008 to also discuss oil exploration with Malta. Malta has been embroiled in a legal dispute with Libya over the demarcation of the continental shelf and the median line separating the two countries since the 1980s.

Pancontinental is now no longer visible on Malta's oil licence map. In early 2009, Pancontinenal restarted operations after Anadarko, which had farmed in the area since 2006, withdrew from the permit due to the lack of progress on the border issue.
But the company said that in May 2009, "without any prior warning" it received a letter from the Oil Exploration Department claiming its exploration agreement expired in August 2008, because a July 2008 request from Anadarko for a two-year extension was not acceded to.