BP LNG supply deal negotiated by Enemalta not Electrogas, minister confirms

The agreement to supply Malta with liquefied natural gas until May next year was concluded directly between Enemalta and BP, the energy minister has confirmed.

Miriam Dalli said on Monday that Enemalta engaged international experts to enable it to negotiate and seal the deal with BP following a “competitive process”.

Malta’s LNG regassificator at Delimara is operated by the private consortium Electrogas that also operates a gas-fired power station on the same location. Enemalta had a 10-year gas supply agreement with Electrogas that expires in August.

This would be the first time that Enemalta entered into direct negotiations with LNG suppliers. Enemalta had no prior experience in dealing with LNG since Malta's power stations started running on natural gas only when Electrogas built its own plant and regassificator. 

Dalli said the agreement with BP was a temporary measure since Enemalta had received expert advice not to enter into long-term arrangements at this stage. “The advice Enemalta received was that the market supply of LNG was expected to rise in 2027,” Dalli said, suggesting the price of LNG could be lower as a result.

Commenting on the BP agreement, the minister said Enemalta will be paying market prices, which will fluctuate according to the TTF Index, a European benchmark for natural gas.

Dalli said the current unit price for electricity sourced through the interconnector is around 12c4. With the new LNG agreement, Dalli said, Enemalta was calculating an overall unit price of electricity of around 11c9.

Earlier, the Opposition asked the government for full disclosure of the price, conditions, and guarantees connected to the LNG gas supply agreement with BP.

The Nationalist Party said the government had resorted to last-minute negotiations after having “ignored for years an expiry date it had known about for a decade.”

During the election campaign, the PN had questioned whether Malta was going to end up without an LNG supply after the current contract expires in August.

Meanwhile, the Labour Party hit back at the PN, saying the agreement with BP put paid to the PN’s scaremongering.

“It is better if the PN were to tell us who its energy spokesperson is, three weeks after the election,” the PL said, criticising Opposition leader Alex Borg for being unable to decide on a shadow Cabinet.