Malta oil drillers lose injunction

Malta oil drillers Pancontinental Oil & Gas and Sun Resources have lost their legal battle for an injunction preventing the Maltese government from granting petroleum rights over a disputed offshore area.

Australian firm Pancontinental claims it had been in discussions with the government over whether or not its existing exploration study agreement (ESA) had expired, as alleged by the government, or if its obligations under the ESA had been suspended pending a dispute with Libya.

Pancontinental and Sun were trying to prevent the government from granting petroleum rights over a disputed offshore area.

On 2 December it won an interim injunction prior to the hearing. But on Friday Pancontinental announced the court had ruled against approving the application for the injunction following a full hearing.

The joint venture declared a force majeure on 12 September 2005 following a border dispute between Libya and Malta which the companies claimed was preventing them from carrying out a seismic programme over the area.

This is a border dispute between Libya and Malta which Pancontinental said was still preventing it from carrying out a seismic programme.

Pancontintental's ESA covers Area 5, and Block 3 of Area 4 which lie within the disputed offshore area off Malta.

In the meantime, the Resources Ministry has been processing applications for a call for tender for oil production sharing contract, and promoting the call in London and Houston.

Pancontinental says it has been attempting to renegotiate the ESA, because government call for bids for the grant of petroleum rights also includes the area that was the subject of the ESA.

It says the government has refused to meet the joint venture partners which led it to seek the injunction to prevent the government from proceeding with the bidding regime over the area covered by the ESA until the dispute was resolved.

"Pancontinental and Sun remain steadfastly resolved to retain their rights under the ESA and to recommence oil and gas exploration for the benefit of both Malta and their shareholders as soon as possible," Pancontinental said in a statement to the Australian Securities Exchange.