From Baku to Portomaso: the makings of Labour’s energy plan

When announcing plans in January 2013 Muscat said he was "confident" that there was "strong interest" from the private sector.

"It is a safe investment for the private sector," he said, denying there was a done deal with any company. "This is not a proposal belonging to any one company. Any company can come forward to submit its proposal," he said.

On 12 January Muscat confirmed that "local and foreign companies have shown interest in the Labour Party's energy plan."

Three months later, a consortium involving two leading Maltese businessmen, a company belonging to the Azeri government, a British oil company with interests in West Africa and German multinational Siemens was already in place to answer the first call for expression, issued in April, just a few weeks after the general elections.

The only consortium involving more than three individual companies among the original 19 bidders, ElectoGas emerged victorious over a number of multinational giants, including the Anglo-Dutch Royal Shell, Russian Gazprom, the Italo-French Edison, South Korean Daewoo and French Soffimat-Gestamp, among others.

The agreement will see the ElectroGas consortium providing Enemalta with gas at a fixed price for the first five years and at a yet-to-be-agreed price for the next 13. The consortium will also own a private power station, from which Enemalta will be obliged to buy energy.

Labour's 2013 energy timeline

8 Jan Labour announces energy plan, which envisions buying gas at fixed price for 10 years from a private company

9 Jan Labour excludes public tender for project

12 Jan Joseph Muscat confirms interest from both local and foreign companies in Labour's energy plan

12 Mar Labour wins general election

11 Apr Government launches bid for expression of interest, which foresees fixed-price agreement for first five years of an 18-year agreement

10 May Government received bid from 19 companies, including 'mysterious' ElectroGas consortium

4 Jun List whittled down to 11

16 Jul MaltaToday reveals shareholding of ElectroGas

10 Aug List whittled down to six

20 Sep List whittled down to three

13 Oct ElectroGas wins energy contract

The pieces in the puzzle

ElectroGas Malta was the only one of the original 19 bidders which included direct Maltese participation, through GEM Holdings - owned by Gasan Group Limited and Tumas Group Limited. With Enemalta being partially sold to the Chinese government, the Maltese shareholding becomes particularly significant.

GEM Holdings is owned by CP Holdings Limited - an import company owned by MEPA board member Paul Apap Bologna, also a director in GEM, Gasan Group Limited and Tumas Group Limited (owned by George Fenech). The fourth shareholder is Yorgen Fenech, also a director of GEM.

Tumas Group is no stranger to joint bids with foreign companies. In 2006, Tumas Group teamed up with Portek Group of Singapore to form Valletta Gateway Terminals, which won the bid for the liberalised port services. In 2009, Tumas Group teamed up with Arriva to win the bid for the liberalised public transport system. Tumas Group was instrumental in securing Arriva, the Chinese-built bus fleet, but sold its shares a few months after the company started operations in Malta.

From BWSC to Electro Gas

Siemens, a German multinational engineering and electronics company, was the manufacturer of the 132kV switchgear for the BWSC plant in Delimara. Before the election, Evarist Bartolo, in a series of articles highlighting the company's questionable record, repeatedly questioned the participation of the company in the BWSC bid.

The company's track record included the conviction of a former manager by a Munich court in 2008. The man was sentenced to two years probation and fined €108,000. In 2009, the World Bank Group announced a comprehensive settlement with Siemens AG in the wake of the company's acknowledged past misconduct in its global business and a World Bank investigation into corruption in a project in Russia involving a Siemens subsidiary. The settlement included a commitment by Siemens to pay $100 million over the following 15 years to support anti-corruption work, an agreement to a debarment of up to four years for the company's Russian subsidiary and a voluntary two-year block from bidding on bank business for Siemens AG and all of its consolidated subsidiaries and affiliates.

As part of the settlement, Siemens also agreed to cooperate to change industry practices, clean up procurement practices and engage in collective action with the World Bank Group to fight fraud and corruption.

Azeri interests

SOCAR - the state-owned energy company of Azerbaijan - produces oil and natural gas and operates the country's two oil refineries and the running of oil and gas pipelines throughout the country.

The company is also becoming a major international player. In Romania, SOCAR is planning a petrochemical refinery complex to supply European countries with oil products. Greece is set to agree to the sale of its natural gas grid operator DESFA to SOCAR.

Caspian natural gas fields are located relatively far from export markets, requiring expensive infrastructure to move oil to ports where it can go to world markets. Exporting liquefied natural gas (LNG) to offshore terminals is one way of doing away with this isolation.

But SOCAR has also faced allegations of lack of transparency.

In Transparency International's 2011 report, the Transparency of Global Oil and Gas Companies, SOCAR performed particularly badly, keeping company with the likes of Angola's SONANGOL and Nigeria's NNPC at the bottom of the rankings.

SOCAR fares particularly badly relative to companies that report on their anti-corruption programmes. The worst-performing companies in this regard were Gazprom, GEPetrol, NIOC, NNPC, SNPC, Sonangol, Sonatrach and SOCAR, which scored zero for the entire section.

"We strongly encourage these companies to publicly disclose their codes of conduct and other similar corporate regulations concerning anti-corruption programmes on their corporate websites. Such disclosure demonstrates public commitment to anti- corruption and allows stakeholders to access relevant information."

Azeri investigative journalist Khadija Ismayilova describes its organisation and structure as "ambiguous to say the least".

"It is registered in Switzerland and is shared, half by the Azeri state company and half by private investors who sprung out from nowhere," Ismayilova has written. "Nobody knows where the capital came from and how private investors got the shares in the first place, since there was no public bid."

SOCAR Trading was established in 2007 by Supra Holding Limited. SOCAR owned 50%, while two offshore companies registered in the British Virginian Islands and in the free economic zone of Dubai owned 50%. The company's headquarters are in Geneva.

The President of Azerbaijan, Ilham Aliyev, was also a vice-president of SOCAR and was in charge of building links between SOCAR and the Azerbaijani presidency.

"The central role Aliyev holds in the Azerbaijani energy policy is not only due to his background but also to his way to rule. Aliyev seems to manage Azerbaijan as a multinational company, writes energy geopolitics expert Samuel Lussac.

SOCAR was embroiled in controversy after its involvement in the demolition of houses on the outskirts of Baku just before the 2012 Eurovision contest. Company employees were accused of beating a journalist who reported protests against the evictions.

In 2012, investigative journalist Shavalad Chobanoghlu challenged Azerbaijan's Supreme Court refusal to order the state oil company to disclose funding for its new multimillion-dollar headquarters: the $250 million SOCAR towers, which dominate the Baku skyline.

From Benin to Malta

Reacting to news that the consortium was chosen by the Maltese government, Alan Buxton, Gasol's chief operating officer commented, "This is a hugely exciting development for Gasol. Although based outside of our usual geographic remit, we have considerable expertise in floating LNG import projects, which we can apply to Malta."

In fact Gasol's main area of interest is western Africa, not Malta.

Gasol Plc is a UK-based gas company, whose website states that it "intends to purchase stranded gas assets in Nigeria and other countries along the Gulf of Guinea". Gasol's primary geographic focus is the Economic Community of West African States (ECOWAS), together with Mauritania.

Gasol has already formed a strategic alliance with SOCAR Trading. Under the terms of the strategic alliance, SOCAR supplies all LNG required for the provision of a floating gas storage and regasification vessel in the harbour at Cotonou, Benin. The project involves the regasification of LNG and the supply of that gas to power and industrial customers in Benin, Togo and Ghana.

According to Gasol the consortium will have an exclusive right to supply LNG to an existing 149MW plant run by Enemalta and also a new 200MW station to be built by the consortium. Gasol has put the total cost to construct the infrastructure of the new power plant and terminal at  €370 million.

According to Gasol the FSU for the project will be provided by SOCAR Trading SA on the basis of a long-term (18-year) charter. SOCAR Trading SA will also have the exclusive right to supply LNG for the project.

A glossary for the new power plant

LNG It is natural gas cooled to -162°C, at which point it becomes liquid. In this compressed form, large volumes can be transported, allowing foreign sources to be shipped to any country in the world. Gas is transported in methane tankers at -160°C in liquid state, and it is then unloaded at regasification plants. In these installations, the temperature of liquefied natural gas is increased and it is thus transformed into a gaseous state to feed the energy grid. The storage and regasification can take place on land or on ships berthed some distance away from the coast.

Regasification In regasification terminals, the ultimate destination of LNG carriers, the liquefied natural gas is returned to its initial, gaseous state, then fed into transmission and distribution networks.

FSU A floating storage unit is a ship permanently anchored along a jetty which is used to store LNG brought by carriers anchored on the other side of the jetty.

The option chosen by the consortium is to have an FSU tanker berthed permanently along a 7,300 m² jetty. This means that no gas storage tanks will be required on land to store the gas as envisioned by Labour before the elections.