Labour disputes oil prices, no mention of carbon-capture storage

Adds PN statement at 4:16pm

The international price of oil cited by Prime Minister Lawrence Gonzi on Sunday earned the rebuke of two Labour MPs today, who claim the government is about to raise energy prices.

Gonzi's claim that oil had reached the price of $150 per barrel was "a lie", Labour MPs Michael Farrugia and Marlene Pullicino said in a press conference today, citing Bloomberg quotes that put the price of oil at $111 a barrel.

"Why is Gonzi lying? Is this a ploy for him to base the forthcoming prices for water and electricity on the $150 price instead of the $111," Farrugia said, pointing to an autumn forecast by the European Commission that indicates energy prices will have to be hiked.

On her part, Pullicino chipped with a proposal to have solar panels floated onto the Maltese waters, but fell short of committing this idea as one of the proposals in Labour's electoral manifesto.

"Since land in Malta is limited, we will look at the possibility of having solar panels at sea, and this proposal could be one of the proposals in our manifesto... Malta needs a mix of energy sources, and a lot of time wasted on studies for wind energy could have been used to invest in solar energy," she said.

Asked about Labour's policy to shift to gas for the Delimara power station's new turbines and whether they had factored in the expenses for the creation of the infrastructure to store gas, Farrugia was again short on any answers.

"What we will not do is build a power station and then not pay for it," he said, only to correct himself later. "To be precise, the power station's extension has been paid for already."

"When the whistle blows and the two parties unveil their manifestos, the people will be able to decide and see the difference between what we are proposing," Farrugia said.

No mention was made of whether Labour was still considering carbon-capture storage as a possible part of a future government's energy mix.

Meanwhile, the Nationalist Party said that Prime Minister Lawrence Gonzi was only referring to the record price reached during the last four years and the possibility of prices reaching the same levels.

"If it was understood that the prices are still at those levels, it was done in error," the PN said.

The statement also said that Gonzi pointed out that the 1996-98 Labour government has increased the water and electricity bill although the price of oil stood at $12 per barrel. The PN said that this decision was endorsed by current Labour leader Joseph Muscat.

"Muscat is now pledging to reduce the utility bills whatever the price of oil is. Muscat is not explaining when, how and how he will make good for these reductions. Oil prices are increasing and Muscat can only make good for any reductions by introducing new taxes. Muscat's promises mean new taxes."

Today the finance ministry said that it needed Norwegian firm Sargas's consent to disclose the findings of a pre-feasibility study that government carried out on its proposal for carbon-capture storage.

"As a result of KPMG's findings, the government has informed Sargas SA that for it to consider its proposal further it requires Sargas SA to provide a full feasibility study which analyses and addresses the major issues outlined above," the ministry said.

Carbon-capture storage industrialists Sargas had proposed a 30-year power purchasing supply agreement for Enemalta, to which government replied with a request for a full feasibility study of the proposal.

Sargas's proposal consists of a power plant that will be accompanied by a coal-fired steam plant on a barge dry docked at Marsaxlokk Bay, complete with emissions abatement and equipped to capture carbon dioxide emissions for eventual storage.

The plant would be fuelled with a mix of coals and bio-fuels, and the CO2 emitted carried out by tankers to be stored in depleted oil wells outside Malta.

Sargas SA have proposed to export the captured carbon dioxide to be disposed of in depleted offshore oil wells for enhanced oil recovery. Initially, this was included in the business proposal as a zero revenue item. Eventually it was included at €8 per tonne. According to KPMG, there is some public opposition with respect to underground storage of CO2 in certain European countries.

KPMG also said it could not verify Sargas's claims that it could sell the by-product ash to concrete producers at €40-€60 per tonne.

KPMG outlined various issues on the CCS option: carbon capture storage depends on adequate carbon prices and guarantees that it will be viable in the long term. Since Sargas proposed a 30-year agreement with Enemalta, the price of coal and the availability of biopaste would have a significant impact on the viability of the project as a whole.

Another consideration is the effect of the coal-fired steam plant on the Marsaxlokk bay and fishing village, as well as other polluting side-effects.