Oil drilling remains suspended as continental shelf dispute with Italy still unresolved

Malta’s appetite to search for oil was reawakened last week when the government awarded a licence to an Italian company for exploration north of the islands.

But an unresolved dispute with Italy over drilling rights in the eastern reaches of Malta’s continental shelf continues to prevent another company from searching for oil.

Heritage Oil was awarded an exploration licence in 2007 for Areas 2 and 7 to the east of Marsaxlokk. Geological studies indicated a possible oil prospect nicknamed Caravaggio.

The area has been “drill ready” for almost five years but the company says on its website that it awaits the Maltese government’s go-ahead before it can start drilling.

The government has confirmed that it has not yet given Heritage Oil permission to commence drilling.

“The Caravaggio prospect is in part of the continental shelf over which there are overlapping interests from neighbouring states. Malta has made various efforts to resolve pending issues with Italy, however an agreement has not been reached yet,” a spokesperson for the government told MaltaToday.

Italy laid claim to the area in 2015 and attempts to broker an agreement for joint exploration of the disputed areas have so far yielded no results.

The same area had been claimed by Libya back in the 1980s when the north African state sent gun boats to stop a Maltese-licensed Italian oil rig from prospecting for oil on the Medina Bank.

Malta’s oil exploration has never been intensive despite the existence of commercially good oil and gas reserves in the neighbourhood, belonging to Italy, Libya and Tunisia.

The latest one-year licence was given to Edison and will see the company carry out geological and geophysical studies on existing data from three offshore zones in Area 3.

The company will study Blocks 1, 2 and 3 that cover the northern most reaches of Malta’s exclusive economic zone, which borders various offshore Sicilian oil fields, including Vega that is also operated by Edison.

This is the first licence in many years and some of the previous wells drilled in the blocks awarded to Edison have indicated the presence of oil and gas but not in commercial quantities.

The area covered by the Edison licence sprawls over 6,400sq. km and the agreement can be extended by a further two years.

Edison has a portfolio of about 90 licences in 10 countries in the Mediterranean area and Northern Europe but the Italian company was purchased by Greek company Energean Oil and Gas earlier this month for an initial consideration of $750 million.