Update 3 | Muscat hails ‘ground-breaking’ agreement on energy prices with Libya

Libyan Prime Minister Ali Zeidan and Prime Minister Joseph Muscat today signed a memorandum of understanding over the purchase of oil products from Libya, which include fuel and crude and refined oil.

In a speech, Muscat said his government had transformed words in action by achieving favourable terms and conditions on the supply of oil from Libya to Malta on crude and refined oil, diesel, jet fuel and LPG.

"We are resetting our country's policy objectives. We are looking south," he said, referring to Libya as a main provider for Europe's energy needs. "We are looking forward to make Malta a hub for energy and a juncture for Libya, to supply the rest of Europe," the prime minister said.

Ali Zeidan arrived in Malta today to join fellow ministers in talks with their Maltese counterparts. The two countries have also signed an agreement to carry out joint oil explorations in disputed areas in the Mediterranean. These agreements come after months of negotiations between the two countries.

"We know that this will take time, but it has created a step forward in the impasse that has been with us for the past 10 years, and provides a new model for work with out Italian partners in the nothern part of the disputed territory," Muscat said.

Zeidan had met Muscat in Tripoli, back in June, to discuss the delivery of oil cargoes at fixed prices. Three Libyan Ministers - Transport Minister Abdulgadur Mohamed, Oil and Gas Minister Abdulbari A. Arousi and Economy Minister Mustafa M. Abofamas - arrived Sunday evening for talks which focused on oil supplies from the North African country, while bilateral talks are currently underway between the Prime Ministers and the respective foreign affairs, transport, energy and economy ministers.

"This is a groundbreaking MOU," Muscat said. "We will be ironing out the details in the coming weeks. It is an agreement that will put Enemalta on a sound footing and shield the Maltese consumer and companies from excessive fluctuations on the world market."

The prime minister said Enemalta was still considered to be a risk for credit rating agencies, and that the agreement signed today would aim at making Enemalta "a sound institution, and not a millstone weighing our economy down."

Muscat said the agreement on jet fuel would also cushion operators like Air Malta from excessive fluctuations, and in the process safeguard Malta's tourism industry.

Muscat also said that the two sides had discussed immigration, with a vision to include Mediterranean states like Italy in joint talks to address irregular migration.

Zeidan said it would still take time for Libya to put its institutions in order, when asked about migrants who have been paying Libyan soldiers to be transported from the North African country to Europe. "We are working with the United Nations on the issue of refugees, for the construction of reception centres and the repatriation of migrants to such countries as Somalia."

Malta was reported to have demanded that it recieve oil cargoes at a fixed price from Libya during a 24 June meeting between Prime Minister Joseph Muscat and Libyan counterpart Ali Zeidan.

According to both the market-leading publication Africa Intelligence and the English-language online newspaper Libya Herald, Muscat got Zeidan to agree to deliver oil cargos at a fixed price in a bid at reducing the island's energy bill.

"Zeidan seems to be deploying a lot of oil diplomacy at present. He has already made similar offers to Egypt and Tunisia," Africa Intelligence remarked of similar agreements Libya has made.

Tunisia already benefits from a delivery of 450,000 barrels of oil a month at preferential rates until the end of 2013 and 650,000 barrels of a month during 2014.

Joseph Muscat sought the advantageous oil deal in a bid at reducing the island's fuel bill, in tandem with preparations for a new 200MW power plant fuelled by liquefied petroleum gas.

The Delimara power station's 'phase 2' extension still runs on heavy fuel oil, but will eventually be converted to run on natural gas.