Malta’s EEZ: such acreage, if well used, can lead to prosperity

Legally, Malta is given jurisdictional rights and duties to a declared EEZ under the United Nations Conventions on the Law of the Sea (UNCLOS). But with power, over the two designated areas for economic activities outside the country´s territorial waters, comes great responsibility

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By Lina Klesper
Legal Assistant at PKF Malta, an audit and consultancy firm

In June 2021, Malta started the process to declare an Exclusive Economic Zone (EEZ) with the potential of extending its footprint by as much as 71,446 sq. km beyond territorial waters. Consequently, the government enacted legislation for the legal framework for economic activities in an EEZ outside the country´s territorial waters. 

With Malta´s size of just 316 sq. km, the zone could potentially be 226 times the size of the tiny Mediterranean island.  Finance Minister Clyde Caruana stressed the huge economic potential such a declaration would give to the Maltese Islands.  In the coming years, Malta´s EEZ could be used for fisheries, artificial islands, wind farms, solar farms, wave-generated electricity, and revenue from shipping movements.

Just recently, the government showed further commitment to proceed with the EEZ plans by identifying two areas for offshore economic activities.  A 900 sq. km zone of shallow waters around Hurd´s Bank will be the designated Area 1 of Malta´s EEZ and a 6,500 sq. km belt around the island extending between 12 nautical miles to 25 nautical miles will form Area 2. The former is said to have the greatest potential due to its shallow offshore characteristics with a depth ranging from 50m to 100m, in comparison to depths ranging from 100m to even 1 km in designated Area 2.

Concessions are planned to be awarded to private companies in a tendering procedure with planning and environmental permits, which will be fast-tracked and issued within only three months after all required documents have been submitted. 

These concessions are foremost aimed at projects for the production of renewable energy, the production and storage of hydrogen, fish farms, and the establishment of artificial islands. The procedure is in motion, and the finance ministry is actively looking for internationally recognised companies interested in undertaking targeted projects in Malta´s newly declared EEZ.

The observation has to be made, that oil exploration and seabed mining are not included among the objectives noting such exception when in the past the government has considered such objectives of crucial strategic importance to the economy of the Maltese islands. 

The current plan seems to have a rather green undertone aiming at attracting the attention of investors who wish to use the area for developing projects both in the renewable and more exciting in the hydrogen production. 

With the production of hydrogen on its list, Malta is paving the way for its own production of green hydrogen, which uses renewable energy sources instead of fossil fuels for energy, to stop being 100% reliant exclusively on the Sicilian hydrogen ready pipeline in the future.  Even though the technology used for the production of green hydrogen still needs to be fully developed and tested, it is a long-term project with the potential of making Malta fit and competitive as an exporter for the future.

Legally, Malta is given jurisdictional rights and duties to a declared EEZ under the United Nations Conventions on the Law of the Sea (UNCLOS). But with power, over the two designated areas for economic activities outside the country´s territorial waters, comes great responsibility.  Malta must have the capacity to monitor any areas that fall within its EEZ, and must ensure effective policing, and needs to manage its resources properly.

On the one hand, Malta has the responsibility to choose and examine the projects carefully to follow ecological and environmental standards.  Especially in the area of Hurd´s Bank, the underwater devastation through bunkering already must be alarming with a high vessel density and lacking ecological control.  

This is to forget the deleterious ecological impact to the seabed from the already existing fish farms. It, therefore, seems important for the government to be extra cautious when issuing fast-tracked permits from the Planning Authority and the Environment Authority.  Especially if the environmental impact assessments are to be carelessly rushed, and the environmental costs should properly be taken into account.

On the other hand, the main problem can be seen in the exercise of the jurisdiction over the newly claimed territory together with its rights and duties.  Malta needs to establish control and enforcement procedures in its economic zone to prevent unsafe practices and environmental pollution and illegal activities, which might include illegal fishing, smuggling, and the trafficking of drugs, among others.  

The area around Hurd´s Bank, which is outside Malta´s territorial waters, is known for illegal oil and gas activities, as became publicly known in 2019 when Venezuela used Hurd´s Bank to make ship-to-ship transfers of oil products to bypass US sanctions.  In practice, the establishment of an EEZ would mean that those activities would now fall under the direct jurisdiction of Malta.

Moreover, under Article 60 of UNCLOS, the coastal state is given exclusive jurisdiction with regard to customs, fiscal matters, safety, and immigration, besides an exclusive right to construct, authorise and regulate artificial islands, structures, and installations.  Within its EEZ, Malta, therefore, has the obligation to take all measures necessary to ensure that human rights are fully protected and that no person is deprived of any protections afforded by the law. 

In the context of such obligations and effective policing, Malta has to invest in adequate resources to check the vast areas of the sea it is now responsible for. In that instance, costs of the enforcement of law and order have to be taken into consideration, as well as the question of a sizeable navy and air surveillance craft sufficient to monitor all of the areas under Maltese jurisdiction. 

In a nutshell, the ambitious dream of Malta´s EEZ could be the way forward to extend territorial potential thus exploiting the commercial viability of the EEZ option.  As can be expected, with more territory comes a higher responsibility and the question arises whether Malta Enterprise can attract FDI to harness fully the capacity and economic power to make optimal use of its EEZ rights, fulfil its duties and keep up with its obligations. 

Time will tell if these waves of change will usher prosperity. With hindsight, the oil and gas exploration drive was mothballed eleven years ago so let us hope a bold attempt is now made to reap the fruits from the EEZ treasure chest.

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