Pipeline option was not feasible in 2003 - Enemalta

A gas pipeline connecting Malta to the Green Stream pipeline between Libya and Sicily was not considered to be favourable at the time, Enemalta said in a statement.

The corporation was replying to media reports claiming that the state company had rejected a financial proposal to connect the island to the pipeline.

But Enemalta said that a report by Eni that was commissioned by Enemalta in 2001 and completed in 2003, had discarded a suggestion by Enemalta itself to connect the island to the Green Stream - the Libya-Sicily pipeline.

In a statement, Enemalta said that a financial proposal for the Gela-Delimara pipeline was only included in the annex of a report, without stipulating the price of gas but an indicative formula tagged to the price of oil.

"Enemalta would have been left with take-or-pay option which would have left the country paying for the gas it was not consuming," the company said in a statement.

"This report indicated clearly that it offered a study for debate, and not a formalized proposal. Indeed, it was noted that the use of gas does not necessarily lead to a reduction in expenses, specifically saying that the market value of natural gas in 'generates the same total expenditure that would be incurred by using fuel oil and gasoil for power generation'."

Enemalta said the report excluded gas sales agreements, which had to be negotiated separately, apart from a commodity charge for the price of gas, and a capacity charge that had to be clawed back over 25 years for the capital cost of the pipeline.

"Enemalta was also considered a new power station at Marsa that would have been necessary with the island's conversion to natural gas. The study was analysed by Enemalta and the government and the clear conclusion was the prospective price of gas, and the conditions and investment necessary for this project, which at the time were not favourable."