Editorial | Intensifying gas exploration efforts is important

The Maltese government has entered into a two-year oil and gas exploration study agreement with Albion Energy for two offshore areas to the east.

The agreement does not mean the company will be drilling wells to test for oil and gas anytime soon. Albion will be carrying out geological and geophysical studies on existing data for Area 2 and Area 7.

The development is positive news in the sense that government appears to be willing to explore and hopefully exploit Malta’s offshore resources. And carrying out studies is always going to be the first step before any company can commit resources and energy to active exploration.

But the decision to focus on Area 2 and Area 7 does raise serious question marks. The same areas had been awarded on concession to Heritage Oil back in 2007 to carry out the very same studies Albion will be conducting. The then-owner of Heritage Oil is now the owner of Albion, and so has particular knowledge of the areas.

Heritage Oil had gone as far as identifying an interesting prospect, which it labelled Caravaggio, for possible drilling. But despite being drill-ready the company was ordered by the Maltese government in 2015 to halt operations because Italy had competing claims to the area.

The dispute has not been resolved despite talks with Italy. The same areas had also been contested by Libya with the infamous gunboat incident of the 1980s forever a reminder of Malta’s weakness in defending its economic interests.

These competing claims by neighbouring countries have for years dogged Malta’s oil exploration hopes on its eastern flank, which many believe could hold interesting hydrocarbon prospects.

Unless these disputes are resolved amicably, Malta will be wasting its time granting licences in these two particular areas. This is why the latest decision to return to Area 2 and Area 7 may not be a judicious one.

Undoubtedly, it makes sense for Malta to intensify its exploration activity, especially where the prospects indicate the presence of natural gas. However, this requires a multi-pronged strategy.

For starters, Malta must embark on a diplomatic offensive to resolve outstanding disputes with Italy, Tunisia and Libya over hydrocarbon exploration in areas Malta claims for itself.

The prospect of joint exploration and exploitation should not be ruled out a priori and may offer a plausible solution to some of the disputes.

Secondly, Malta must up its game and drill more wells. It is not enough to say that all efforts so far have given negative results. That is to be expected. But the truth is not enough effort to actually drill wells has been made since the 1950s when the first well was drilled.

Intensifying exploration efforts in those areas where there are no disputes is a must. This can be achieved through partnerships with private companies but government should also consider setting up a State-owned exploration company.

Although Malta must continue to champion alternative energy sources in an effort to combat climate change, it is naïve to believe that the transition can be done overnight.

Natural gas, a less polluting fuel, is likely to be an important transition fuel in the years to come. Furthermore, the Ukraine invasion has shown the importance of Europe cutting its dependency on imports of strategic products.

To have energy production based solely on renewable sources will require more research and development into battery technology to ensure security of supply by removing the problem of intermittency.

Until this happens, fossil fuels like natural gas will continue playing an important, even if a diminishing role.

Within this context, Malta must try to exploit its offshore resources to the fullest, which is why intensifying exploration efforts should be a government priority over the coming few years.