Malta agrees with Italy to fund gas pipeline to Sicily

Malta will shoulder the full cost of the €400 million gas pipeline project to Sicily, according to an agreement reached between the two countries’ regulatory agencies.

Signed last month, the agreement between the Maltese Regulator for Energy and Water Services (REWS) and its Italian counterpart, ARERA, suggests the project can be completed by 2024, two years earlier than previously thought possible.

The project will be carried out by Melita Transgas Ltd, a company set up last year by the Maltese government, and will also benefit from EU funding.

The pipeline is considered a project of common interest by the EU because it would end Malta’s isolation from the European gas network.
The primary shareholder in Melita Transgas is Petromal Ltd, a government company that acts as a fuel importer and operates Enemed. Melita Transgas will also run the operation when the project is completed.

The agreement that was published on the respective websites of the energy agencies states that a cost-benefit analysis of the project would see Malta get the lion’s share of the benefit from the pipeline project.

Malta will gain a net benefit of €313 million from the project, as opposed to Italy’s €19 million, according to the documentation.

The pipeline will enable Malta to reduce its CO2 emissions, give the island greater energy security and eventually provide the possibility of gas transfers from Malta to Italy.

In line with the findings, it was agreed that Melita Transgas would foot the bill of the project that includes a 22-inch diameter bi-directional pipeline running a distance of 159km between Gela in Sicily and Delimara.

The project was originally slated for commissioning in 2026 but the latest analysis foresees a possible completion by 2024.
A breakdown of capital costs sees €169 million, the largest investment, going into the material supplies for both the onshore and offshore sections.

The construction of the shore approach in Gela will cost €17.1 million, while the Malta-side approach will cost €5.5 million.

The offshore installation of the pipeline will come at an expenditure of €123.7 million.

A further €18 million and €9.8 million will be spent on the terminal stations in Gela and Delimara, respectively, while engineering and management have been estimated at €56.1 million.

The pipeline will transfer natural gas to Malta for use as fuel in the Delimara power stations. The project will render the liquefied natural gas terminal, including the floating storage facility at Delimara, useless and allow for the removal of the LNG carrier from inside Marsaxlokk harbour.