Beyond Covid and Socar dreams

Experts predict that next year oil prices will rise again and may reach a sustainable point at which level it will encourage oil producing countries to start exploration in new fields.

One may ask, what is the relevance of this prediction to Malta, an island which has not bothered to explore its continental shelf for the past decade? The truth is we have neglected an opportunity to study scientific data collected by various seismic reports available at the Continental Shelf directorate.

One cannot but ponder why our political leaders have skirted away from this industry and focused entirely on “get quick” rich sectors such as selling of passports, mass tourism and other volatile niches - namely remote gaming, pharma and film making. These sectors are not self-sustaining, and in some instances, pose a heavy burden on our air quality and a heavy strain on our environment.

On the other hand, there has been a time in the past when times were hard, that politicians whetted the appetite of voters with untold riches coming from tales of sporadic exploration for oil and gas (usually at the hustings prior to elections).

This has unfairly baptised the subject as a taboo. It is well documented that hydrocarbons have been produced for several decades in areas adjacent to our continental shelf. Notable fields include Ragusa (200 MMbbl), Gela (150 MMbbl), Vega (125 MMbbl) and Irminio (70 MMbbl) in southeast Sicily, Ashtart (310 MMbbl) and Miskar (800 Bcf) in offshore Tunisia and Bouri (3.7 Bbbl & 1.9 Tcf) in offshore Libya.

Experts have studied seismic reports which reveal how Malta has prospective petroleum geology with formations which are analogous to those found in contiguous producing fields. To mention just one lying a mere 60 miles north in the Sicilian channel - that is the rich Vega field which has been in production since 1987 with 24 wells, and located in 130 metres of water.

It is true that our offshore department has a treasure trove of seismic data collected by various oil prospectors. Nostalgically, it was 1954 when the first onshore concession was awarded to a company called D'Arcy Exploration (BP) to drill an onshore well in Naxxar. All attempts since then have failed with dry wells and a couple with some oil and gas prospects but no commercial success followed.

Yet, nobody denies the fact that our main source rock is rich in the organic Streppenosa oil shale unit which is designated world class in its prolific oil generating capabilities. No wonder the rich Sicilian Vega oil fields to the north have an estimated resource of 1 billion barrels of oil in place. Needless to say, experts predict that the proximity to the producing basins of Tunisia and Sicily lend support to the theory that oil strikes for Malta cannot be excluded.

The “intra-basin” ridge trend offers a new and highly prospective oil strike in our waters. Geologists tell us that the south blocks facing the prolific Sirte Basin, appear to contain analogues similar to proven producing fields in Libya in addition to those in offshore Tunisia. Ideally, once agreements over the alignment of our continental shelf with neighboring countries are resolved, then fortune favours the brave. Using modern 3D seismic imaging of the Cretaceous and Jurassic sequences can enable several large leads to be defined at this stratigraphic level.

This legacy of seismic data and sporadic drilling was collected in the past from various companies including BP, Texaco, Genes, and Eni, albeit not enough political drive was present to intensify the search. The good news is that government started negotiations with EU (these have proved successful) to link Malta to the natural gas network grid to Gela (Sicily).

This subsea gas pipe will eventually link us with the rest of Europe. It is a smart move and can lead to commercial applications, if we can discover a source of gas discovered in our vast territorial waters. With hindsight, the Muscat administration never took the industry seriously and when the opportunity arose to switch electricity generation to LNG it rushed to sign a deal with Socar, the State energy company in Azerbaijan to supply us with LNG for 18 years. This deal involved a consortium to build and run Electrogas (a private electricity generation company which is beset with controversy following kickbacks allegations revealed in a public enquiry on the killing of a journalist). Be that as it may, readers may link success in oil as a taboo subject but it proved to be manna from heaven for Cyprus, Israel, Egypt and Libya, Tunis, Greece, Italy.

Hypothetically, success will breed more success, but we must focus our energies to attract investors as Cyprus did. For example, Cyprus signed a number of natural gas exploitation deals worth $9.3 billion with a consortium comprised of Shell, US-based Noble and Israel's Delek.

The 25-year licence for the Aphrodite gas field is the first to be discovered off Cyprus, by Texasbased Noble Energy and is estimated to contain over four trillion cubic feet (over 113 billion cubic metres) of gas. The first production contract means Nicosia is set to receive an average yearly income of $520 million over an 18year period. By comparison, this equates to the annual income Malta expected from running the citizenship by investment scheme.

The latter, is under the spotlight by EU, which is cautioning us to curb the scheme since it asserts that applicants abused of the scheme to run money laundering and other illegal practices. In fact, the Cyprus scheme has been terminated last month. Back to the fossil fuel topic, one appreciates that it took Cyprus almost a decade since it discovered oil in the Aphrodite well to start monetising its worth.

The question, one may ask is why Malta has not followed suit ten years ago? Incidentally, there is no mention on the subject in the 2021 budget. LNG as an energy resource has become the preferred choice with cleaner emissions than oil for electricity generation. We augur that Ms Miriam Dalli can use her vast contacts in the EU parliament to attract bona fide investors.

If Cyprus and Israel attracted American capital to fund serious exploration - so can we.