Licence to drill | Peter Gatt

They say that 'oil and water' don't mix. Could the same also be true of 'oil and Malta'? After all, efforts to locate a viable oil field anywhere within Maltese territory have sporadically taken place over the past 50 years - either on land, as we saw in the 'Madonna Taz-Zejt' oil well in Gozo in the 1990s; or more commonly out at sea somewhere on the Maltese continental shelf. All such attempts have so far proved unsuccessful.

In some cases, not only has no oil or gas been discovered (at least, in quantities deemed commercially viable)... but often drilling initiatives have been hampered by territorial disputes: the most iconic example being the Saipem II oil rig incident of 1980, when Libyan gunboats were dispatched to halt operations in the contested maritime area known as the Medina Bank.

By and large, the pattern has always been the same: high expectations, dashed mercilessly against the rocks by the cold light of reality. And this in turn has fuelled a certain street-level cynicism at the mere mention of the words 'oil exploration' in Malta. Unfamiliar with the geological complexity of their country's underlying rock formations, most people simply assume that, because earlier exploration efforts have proved fruitless, there is no reason to assume that future attempts might prove any different.

So when government announces new concessions to foreign oil exploration companies (as it did last summer), the general reaction rarely goes beyond shrug of the shoulders and a yawn of exasperation.

And because such announcements are invariably made in the run-up to elections - and that despite several concessions, no oil strikes ever seem to materialise as a result - it seems that most people's scepticism may well be justified.

But Dr Peter Gatt, a geologist who has specialised specifically in the geology of the Malta continental shelf, is not convinced. To him, Malta's failure to discover either oil or gas in commercial quantities at any point in the past 50 years has less to do with the paucity of these resources on Maltese territory, than with the lethargy and lack of enthusiasm of the government departments who have to date been responsible for this particular sector.

I meet him in a quiet Balzan café, where he expands on his view that the widespread impression of Malta as a country completely lacking in oil and gas reserves is simply not upheld by any proper scientific observation or research.

"There is no reason to believe that Malta doesn't have its own oil reserves. In fact the indications I have seen suggest the opposite..."

Part of the reason for his optimism is that the few studies conducted so far have yielded what he describes as 'definite hydro-carbon indicators', mostly in the form of gas emissions. "In the rest of the world, such indicators would be interpreted as signalling a high probability of an underlying oil or gas field," he goes on. "Strangely, however, in Malta the same indicators were interpreted in the opposite way: i.e., as an explanation for Malta's failure to find oil...."

Apart from occasionally misinterpreting scientific data, Malta has also (according to Gatt) been guilty of not conducting enough research of its own.

"In fact there is no current research at all, except for private initiatives like the ones carried out by myself. The geological data regarding oil exploration shown today on the MRA website is identical to what was on the internet 10 years ago. This means that there was no new research (apart from mine, but the MRA is either unaware or uninterested in that...) in 10 years."

Even more damning is the lack of any sustained oil exploration effort beyond the very occasional, very half-hearted oil well drilled by foreign companies operating as a government-licensed concessionaire.

"If you look at the number of oil wells Malta has actually drilled in the past 50 years, and compare it to other Mediterranean countries, the results are astonishing," Gatt continues.

"The last Maltese oil well was drilled 10 years ago. And in 50 years of oil exploration, Malta has only managed to drill 12 wells in total... most of them over 30 years ago in the 1970s. Meanwhile in the corresponding period, Italy managed to drill 7,000 wells. The comparison is simply shocking..."

Agreed, but couldn't there be a much simpler explanation for the discrepancy? What about the respective sizes of our countries? Let's face it: Italy surely has more options at its disposal than (comparatively) tiny Malta...

But Gatt rejects any explanation that accounts for the discrepancy in terms of size alone. "Malta may be a small country in terms of landmass," he counters, "but our continental shelf is not small by any standard. Granted, Italy's territory is greater than ours, and they can therefore expect to have more active wells than Malta. But comparing on a like-with-like basis, if the density of wells in Malta were equal to that of Italy, we should have hundreds of wells. The fact that we only managed to drill 12 wells in 50 years is a declaration of total failure of Malta's oil exploration efforts."

This sort of failure, he argues, is simply not an option in view of what is now an ineluctable impending energy crisis, which is likely to hit Malta much harder than other countries on account of our total dependence on oil for energy production.

"Eurostat recently published a list of countries in order of their dependence on oil imports. Malta placed at the top of the list, followed by Luxembourg and Cyprus. This means we are officially the most vulnerable country in Europe when it comes to fluctuations in oil prices. And yet, though we have the biggest reason of all other EU States to step up our oil exploration efforts, we are also the one European country that seems to have done practically nothing about this situation in half a century."

Expanding on the significance of this list, Gatt comments on the fact that, unlike Malta, second-placed Luxembourg has very little option but to import its oil from third countries. "It's a small landlocked country, without a continental shelf," he points out. "So what choice does it have in practice?"

As for Cyprus, even if the situation is currently not too dissimilar from our own, the Eastern Mediterranean island has nonetheless invested far more than Malta in oil exploration in recent years, and the initial investment seems to have already paid off. "They recently discovered a gas field, which will go some way towards solving Cyprus's energy crisis. How does Malta intend facing up to this crisis, when we are not only 100% dependent on oil for our energy needs, but also to generate water - which incidentally promises to be the cause of another crisis in future?"

More recently still, the urgency for Malta to start emulating Cyprus and embark on a much more serious oil exploration offensive was further emphasised by the recent International Monetary Fund report: which highlighted Malta's dependence on oil imports as one of the country's major economic liabilities.

Curiously, no one - not even government's most strident economic critics - appears to have pointed out this aspect of the report in their criticism.

At the same time, however, I point out that what Gatt tells me today appears to conflict with the (admittedly very occasional) official declaration emanating from the Ministry of Resources and Rural Affairs. In fact it was only fairly recently that the MRA announced the granting of a number of concessions to drill in various 'areas' (as the designated parcels of territory are generally called), mostly to the southwest of the islands.

Gatt shrugs, as if to say: drilling wells is one thing, dishing out licences is another...

"What's important is the drilling. It matters little how many licenses you give out, if the companies you give them to do not actually use them to drill any wells..."

So... why bother with oil exploration concessions in the first place? The answer I find myself hearing seems to have little to with Malta's own oil exploration efforts at all.

"Licences are very lucrative for oil companies, as they provide leverage for negotiations with other countries and/or companies involved in oil exploration," he replies matter of-factly.

As an example Gatt points towards one of the more recent concessionaries, Heritage Oil.

"Every time Heritage says it is going to drill a well, its share-price goes up. But despite having an active licence to drill to the east of Malta, they have not actually dug any wells at all in the past 10 years..."

A similar point can also be made about the lack of local research (with the exception, that is, of private efforts by individual researchers) regarding the geology of Malta's continental shelf.

"If we don't do our own research, we will have to depend on foreign consultants to do it for us. Why should we have to commission expensive reports instead of investing more in local academic institutions? Why doesn't the University of Malta have its own geology department... when geology is the study of what is, after all, about the only natural resource we actually have?"

Apart from the expense involved in commissioning foreign experts, there is a strategic consideration to be borne in mind. At present, no stage of the local oil exploration process (apart from the granting of licences) is actually in our own hands. We are dependant on outsiders for every aspect of the process... and as recent history shows (with ongoing territorial disputes between Libya, Malta and Italy over the Medina Bank) it is not necessarily in the interest of other countries for us to find oil.

So how does Dr Gatt himself account for the lethargy of successive governments in this regard? I find it hard to believe that a Maltese government would act against the country's interest merely to please other countries...

Dr Gatt agrees. "The problem concerns the administrative infrastructure as a whole," he replies. "It's not so much that they don't want to find oil; it's that they haven't exactly been very efficient. In the past, at least we used to have an Oil Exploration Division. For some reason this has been shut down and amalgamated with the Malta Resources Authority. But what has MRA done, considering that not a single well was drilled in Maltese continental shelf for the past 10 years? What were these people doing all that time?"

However, this turns out to be a difficult question to answer. Apart from having been on the inactive side when it came to researching and drilling, it seems that the Malta government is also among the most reticent in the world when it comes to divulging information regarding its oil exploration programme.

"To date I cannot get hold of any data on oil wells from the Maltese government. Instead I have to go to the oil companies and get the information from them... even on such basic matters as co-ordinates of oil wells. The information is locked away in government departments so that no one can access it at all. What kind of policy is that? Why are they trying to hinder and stifle research?"

By way of contrast, Gatt explains that if he wanted to obtain the same sort of information regarding a North Sea oil well, "all I would do is send an email to the relevant authority in the UK, or Norway, or wherever, and within a few days I'd get a reply with all the info. It's as simple as that."

To illustrate how very different the situation is in Malta, he tells me how his efforts to extract information from government about a 30-year-old well in Malta's territorial waters got nowhere at all.

"At one point a member of parliament asked the resources Minister a Parliamentary Question about the Medina Bank oil well... and it wasn't even answered. Instead the minister just said that this was 'confidential information'."

The irony, he goes on, is that the same information about Italian wells is easily obtainable from the Italian government... and yet Italy is involved in a legal dispute with Malta and Libya precisely over oil exploration rights. 

"Libya sent a gunboat to stop the drilling, so they definitely know where the well was. Saipem (which drilled the well) is a subsidiary of Italy's national energy provider, ENI. And Italy also has a declared stake in the territorial dispute between Malta and Libya over that part of the continental shelf. So they know where the well was, too."

And yet local researchers find all doors slammed shut in their faces the moment they start asking for information that would be public domain in any other country.

 "Not even Saddam Hussein's Iraq was as secretive as this. It's shocking..."