Do we need a National Oil Company?

Source: Mr G M Mangion¸ PKF Malta

As published on Malta Today on Wednesday 11th September 2013


It was more than sixty years ago that the government of that day embarked on a drive to market Malta’s offshore acreage among oil companies with a view to encouraging investors to prospect for oil and gas . Precisely it was 1954 when an unsuccessful onshore concession was awarded to a company called D’Arcy Exploration (BP) to drill a well in Naxxar. All attempts since then failed with some dry wells others with some oil and gas prospects but no commercial success followed albeit it is heart-warming to hear official circles reveal that the main source rock for the oil is expected to be rich in the organic Streppenosa oil shale unit which is designated world class in its prolific oil generating capabilities¸ and most likely extends into the area from Sicily. There is a recognisable fairway of oil discoveries and oil fields leading from onshore Sicily into its southern offshore waters.

No wonder that the offshore Sicily Vega oil field¸ with an estimated resource of 1 billion barrels of oil in place¸ is only 20km away from the northern border of the latest zone in Malta’s exploration efforts. Needless to say¸ experts predict that the proximity of similar concessions and similarity in geology to the producing basins of Tunisia and Sicily lend support to the theory that oil strikes for Malta cannot be excluded. The “intrabasin” ridge trend therefore offers a new and highly prospective oil strike in our waters. Mediterrean Oil and Gas (MOG) a company which was awarded in 2005 with a license to explore for oil and gas had commissioned a specialist operator to shoot seismic survey and it succeeded to interpret an extensive long-offset 3D view over the area which looks promising. It is now apparent that this part of offshore site is geologically analogous to the Libyan Sirte Basin¸ meaning it appears to contain analogues to proven producing fields in Libya in addition to those offshore Tunisia. Specifically the experts have identified a portfolio of prospects in the Lower Eocene/Paleocence sequence. The powerful scientific survey has for the first time allowed imaging of the Cretaceous and Jurassic sequences¸ enabling several large leads to be defined at this stratigraphic level. MOG will also invest in the first exploration well¸ which is planned to be drilled to a minimum depth of 2¸500 metres¸ and a 100% carry on the second exploration well up to a maximum of US$30 million gross expenditure.  This is sweet music to the ears of shareholders of both the parent company Genel Energy and MOG while the markets have sensed a good bet and the shares have at that time rallied. It is relevant to quote Dr John Hurst ( COO for Genel )  he was confident in saying ¸”We are delighted to have reached agreement to farm in to the Area 4 Block Offshore Malta¸ a licence with considerable exploration potential being geologically similar to known producing areas nearby in Libya and offshore Tunisia. It is consistent with our strategy of building a portfolio of high impact exploration assets within the Middle East and Africa.”

In another way it is also pertinent to quote Dr Peter Gatt¸ a qualified geologist with a number of year