Oil company to sue MOG over Malta concession deal

Two oil drillers in Malta's oil exploration area risk being involved in a feud over their working interests in Maltese areas.

Leni Gas & Oil has announced it has given Mediterranean Oil & Gas Plc (MOG) until this evening Monday, to provide information over the factual position of its representations before the sale of the company's 10% working interest in Malta Area 4.

Lenigas said its directors, through lawyers Mishcon de Reya, said they had attempted to seek confirmation from Mediterranean Oil and Gas (MOG) "on the factual position underlying MOG's representations to LGO before the sale of the company's 10% working interest in Malta Area 4."

Lenigas has expressed surprise that MOG had entered into farm-in agreements with Genel Energy, which belongs to former BP chief Tony Hayward, for a US$10 million cash consideration and two-well commitment on the offshore Malta Area 4 production sharing agreement, only weeks after LGO had agreed to sell its 10% working interest to MOG for US$1 and US$20,000 of joint venture liabilities.

Lenigas said that should no satisfactory answers be received by the evening of Monday 3 September, Mishcon de Reya will seek disclosure through the courts and to assess Lenigas's grounds for rescission of the sale of its 10% interest in Malta Area 4 on the grounds of misrepresentation.

"Lenigas would not have sold its interest for US$1 plus liabilities had it been aware of interest from Genel Energy or other potential farm-in partners. LGO considers that MOG's subsidiary PECL, as operator, was at all times under a duty to provide such information to LGO."

Lenigas said it is concerned that representations other than the factual position may have been made to it prior to agreeing to sell and before signing the sale of its 10% working interest in Malta Area 4.

The Financial Times reports that for Genel, the deal with MOG is a bet that offshore Malta will prove as rich in hydrocarbons as nearby Libya. Tony Hayward knows Libya well, having spent months negotiating BP's famous $900m exploration deal with the Gaddafi regime in 2007.

In an interview last month, he said Malta was an extension of Libya's Sirte basin, one of the world's great oil-producing areas.

Malta's waters had "significant exploration potential", he said.

Genel Energy, the oil company run by former BP chief executive Tony Hayward, has bought a stake in exploration blocks off the coast of Malta from Mediterranean Oil and Gas.

Bill Higgs, MOG's chief executive, says the revolutions that swept north Africa and the Middle East last year have encouraged companies to take a fresh look at the region. "There are a lot more opportunities than there were before the Arab Spring in places like Egypt, Libya and Tunisia," he says.

Since 2009, some 35 trillion cubic feet of gas - roughly half of Canada's total reserves - have been discovered in the deep waters off Israel and Cyprus, much of it by the US independent Noble Energy. One of the fields, Israel's Leviathan, which was discovered in 2010, was the world's largest deepwater gas find in a decade.