[WATCH] LNG supply secured until 2026, Energy Minister says

Malta has secured the required liquefied natural gas supply for the next four years to be able to operate its power stations, Miriam Dalli said.

In the wake of a scramble by gas-dependent European countries to find alternative supplies to those normally derived from Russia, the Energy Minister said Malta had negotiated a contract up until 2026.

“The gas supply that has been secured and the electricity we get from the interconnector meet the demand that the country requires,” Dalli told MaltaToday on Friday after attending a press event at a medicinal cannabis factory in Ħal Far industrial estate.

Enemalta, the state energy supplier, brokered a contract for difference with Italian trader Enel, in which the price for the supply of liquified natural gas to Malta is pegged against that of Brent crude oil. Enel agrred to make up for any fluctuations in price, while Enemalta will be able to keep utility bills stable, while absorbing any potential price hikes.

Malta partially relies on importing electricity from Italy to meet demand and prices there have soared in the wake of the Russian invasion of Ukraine.

“It does not mean that we are not looking beyond that point. The economy is always expanding and so is the electricity supply. That is why we will be building a second interconnector and are pushing for renewables. Our vision is for Malta to move away from fossil fuels onto clean energy sources,” Dalli said.

Malta received an exemption from a mandatory 15% reduction in gas use agreed at EU level this week to counter the reduction in supply of Russian gas. Malta was among a handful of countries who were granted an exemption.

This exemption will help protect businesses and consumers, Dalli said.

“This exemption is important for Malta as we are not connected to the rest of the European gas network and our energy production is very dependent on gas… this will help us during a time of economic recovery,” she added.

The European Union’s member states have reached a political agreement on a voluntary reduction of natural gas demand by 15% for the coming winter, in a bid to make savings ahead of possible disruptions of gas supplies from Russia.

Wholesale gas prices more than doubled over the past year between a slowdown in production due to the COVID pandemic and the Russian invasion of Ukraine. Government has however guaranteed energy price stability by subsidising the difference in cost.

Questioned whether the government was negotiating a downward revision in the price of electricity with Electrogas, Dalli said that the price of LNG required to produce electricity was tied to the price of Brent crude oil.

“A continuous exercise is conducted by Enemalta in order to seek the right moment to negotiate the price – we strive to find the right balance between the price and supply of LNG.”