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While the world is exhausting known oil reserves a great deal faster than new reserves are coming on-stream, the oil and gas industry has started exploring reservoirs in much deeper water, a much more complex geological environment.
This is good news for Malta as it laments its bad luck over 13 dry wells drilled so far. According to the government website we read that hydrocarbon exploration activity in Malta was triggered by the discovery of oil in 1953 at Ragusa in nearby SE Sicily. Official circles reveal that the main source rock for the oil is expected to be the organic rich Streppenosa oil shale unit which is designated world class in its prolific oil generating capabilities, and likely extends into the area from Sicily. There is a recognisable fairway of oil discoveries and oil fields leading from onshore Sicily into its southern offshore waters. No wonder that the offshore Sicily Vega oil field, with an estimated resource of 1 billion barrels of oil in place, is only 20km away from the northern border of the latest zone in Malta’s exploration efforts.
Experts predict that the proximity of similar concessions and similarity in geology to the producing basins of Tunisia and Sicily lend support to the theory that oil strikes cannot be excluded. The “intrabasin” ridge trend therefore offers a new and highly prospective oil strike in Malta.
Although drilling for oil in territorial waters has had its ups and downs, many contend that we cannot count on immediate success that oil can be discovered in commercial quantities, but prospects for the next three years up to election date look brighter. Already Italian concessions in the Ragusa basin not far from the Maltese territory such as the Ariel field indicate potential reward in the billion barrel bracket. Naturally, modern technology has improved the prospects as a result of better analysis of seismic data.
One such company involved in oil exploration is MedOil PLc. This oil and gas exploration company focuses on basins in the Mediterranean and North Africa regions. The company holds the benefit of an Exploration Study Agreement over blocks 4, 5, 6, and 7 in Offshore Malta Area 4 on the Mediterranean Pelagian Shelf. Area 4 lies to the south of Malta abutting the boundary with the Libyan offshore area 44. A small part of the total area has been subjected to 3D seismic and three prospects have been identified in that area. MedOil raised £3.25million for financing an extensive seismic offshore programme.
The company’s CEO, Dave Thomas commented: “I am very pleased with the progress we are making to explore our current assets in Tunisia and Malta. The new funds will allow us to conduct the seismic programmes that will help us identify potential drilling targets in both our Tunisian and Maltese acreage. At the same time MedOil will be seeking additional exploration interests in areas in the circum- Mediterranean region.”
The positive news is that last December MedOil updated shareholders on the Maltese permit and reported positive findings such that it encouraged investors to risk more capital to conduct a 2-D seismic programme in the area in the third quarter of 2006. This comes on the heels of the recent announcement by Dr Frendo the foreign minister that a joint exploration agreement was signed between Malta and Tunisia. He further announced that a team of experts from the two countries will be working on the determination of zones on the continental shelf where joint oil exploration could be carried out. They will be given three months within which to report back to their governments. This agreement was reached following 35 years of uncertainty and would appear to be a practical approach to take in cases where two or more parties are involved in disputes over the delineation of zones. It goes without saying that a similar agreement is long awaited to be negotiated with both Italy and Libya. Without such an accord Malta cannot claim success. The matter was also raised in Parliament by a Labour MP, but it appears that the government is as yet reluctant to give an overall, detailed review of the situation. In a matter of such importance, one that could well help mitigate the country’s accumulated debts many contend that within the realms of commercial secrecy, the government ought to be more open with its citizens. Ironically the government has been trying to explore and drill for oil both inland and offshore but has never been blessed with a commercial success. Exploration work in the 1960s identified a number of hopeful sites to no avail. With the price of oil at its peak the impetus for further exploration may be more tempting and modern techniques could uncover new possibilities. Given that all neighbouring countries have successfully drilled for gas and oil in commercial quantities it is imperative that Malta reaches a amicable and honourable accord with its oil producing neighbours. Short of this ,vast tracks of acreage remain unexplored.. In the late seventies we were encouraged that the southern banks closer to Libya could yield positive results. Our hopes were dashed when a dispute arose with Libya over the delineation of the continental shelf and this took a number of years to be resolved in the international courts. On a positive note, Libya supplied us with oil at subsidised prices for a number of years.
On the political stage, following its return to the international fold after the Lockerbie settlement, Libya is keen to capitalise on its new position. The improved geopolitical landscape has led to a frenzy of foreign investor interest in the Libyan oil industry over recent months and in this renewed scenario one hopes for a speedier resolution of the delineation of acreage.
What lessons are to be learnt? Nobody can blame the government for increasing the surcharge again on the price of fuel and water supplies. The island is so dependent on burning fossil fuel to operate heavy energy users such as reverse osmosis plants.
But what about green energy? Ironically a master plan announced by Malta Resource Authority ( MRA ) last year as a road map for developing solar and other renewable energies in Malta is eagerly awaited by environmentalists.
The MRA recently announced that it was working on a reform of the electricity sector, the regulation of utilities, exploitation of renewable energy and regulation of mineral resources. Although green energy would require a hefty investment, and may gobble up the lion’s share of the EU structural funds yet it would on the long run reduce Malta’s dependence on the importation and the price fluctuations of oil. Scientists at the university have been experimenting with solar panels and exploiting wind energy for years but nothing materialised on a commercial scale.
Why have we dragged our feet for so long? In Italy, use is made of solar energy and surplus domestic production of electricity is plugged into the national grid for others to use for a rebate in costs of electricity for the domestic supplier. Advanced technology exists to enable a radical overhaul of the way energy is generated, distributed and consumed. Much depends on the speed of reform instigated by the MRA; intended to introduce among other things, adequate economic incentives for private investment.
While consumers have been conditioned to believe that each oil price spike is eventually met with a drop to lower levels, some analysts believe that the latest rise may have established a new, long-term “floor” for the price of crude. If this is true then we must seek an alternative plan by tapping green energy.
Maybe, one day, we can start tapping nature’s free sources of energy.
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