Source: Mr G M Mangion¸ PKF Malta
As published on Sunday 28th July 2013 on the Sunday Independent.
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Obviously the man in the street expects that the Hon Joe Mizzi now responsible for oil and gas exploration makes it a priority to seriously consider a proper investment strategy and plan a solid future oil exploration plan. As reported in the media Mr Mizzi said the government was giving a boost to oil exploration and would open all the areas around Malta for interested companies. Mr Mizzi hit the road running since it was reported that he already had meetings with a company interested in drilling two exploratory oil wells. Government intends to open all seven areas on the island’s continental shelf for exploration licensing. We all know that the investment needed by a company in drilling offshore wells in deep waters reach upwards of €60m each apart from the cost of 3D seismic surveys.
It takes a lot of encouragement for companies to take the plunge and risk their capital in Malta acreage. In this context it is encouraging to read that PKF this year had teamed up with Master Investor 2013¸ which is UK’s leading investment show taking place in central London to attract investors in this sector. The show is now in its 11th year and attracted over 2¸500 attendees where investors meet with top executives in various sectors including oil and gas exploration and ancillary industries. It also gave investors unique insights on country specific opportunities. The speaker from PKF explained at the London event that it was more than fifty years ago that the government of the day embarked on a drive to market Malta’s offshore oil acreage among investors with a view to encouraging them to prospect for oil and gas . Priorities change under different political administrations so in the past administrations spearheaded Malta’s oil exploration drive but unfortunately this was not a top priority as Malta had to overcome great difficulties to develop its economy after the UK services rundown and needed massive injection of development capital to build hotels and catering establishments to create not only a new tourism industry from scratch but to diversify into manufacturing and service industries. Observers lament that oil exploration since the late eighties was not viewed as a viable industry and more so under the PN administration of the past decade it has even gone in reverse drive. With hindsight the culture of “money no problem “ propagated under the early nineties political saw the administration throw caution to the wind and started accumulating a national debt mountain with the proviso that all such credit was safe as no foreigners were asked to contribute because it was the locals /banks who snapped all the government bonds . Did it cross our politicians mind that if proper investment was set aside for regular oil and gas drilling this may result in another income stream which will prove useful if properly harvested and can be set aside to repay the debt now reaching a figure exceeding 75% of GDP . Not enough drilling was done and the few wells that were ventured since 1953 failed resulting with 12 dry wells and a few others with limited oil and gas shows. Exploration frenzy was triggered by the discovery of oil in Triassic dolomites at Ragusa in nearby SE Sicily when in 1953¸ a local company “The national Oil Development Company (Malta) Ltd.”¸ financed by Malt