VALLETTA, Malta - My car driver, Heathcliff, points to a large oil rig docked in the Valletta Harbour as he takes me to the airport. “It’s being repaired to start drilling,” he says.
A day earlier, I noticed two rigs already offshore when I visited Blue Grotto on the southwest part of the island.
A native Maltese, named after the character in English literature-classic Wuthering Heights, Heathcliff tells me that people in Malta, a former part of the British Empire, are more interested in the planned conversion of the local power station to run on natural gas than the small country’s plans to drill for oil.
Malta currently relies on oil imports, mostly from Libya. They hope natural gas will reduce Malta’s dependence on electricity produced from oil, and will result in corresponding reductions in electricity costs.
Valletta-based GM International Services Limited Chairman John A. Gauci-Maistre, a maritime major, tells me Malta is completely dependent upon imported fuel oil which is combusted in mostly older low-efficiency plant. This results in high marginal costs for power generation on the islands.
“Having the power station run on gas is a cost saver,” he says. “On a local level people may disagree. You know how it is in local politics and Malta is a small island so we know each other. But I think all in all the current government is determined to move on what the previous government had built up,” Gauci-Maistre says.
There is a discussion about having liquefied natural gas (LNG) storage in one of the harbours. “There is a whole a lot of talk going on about the safety and whether it should be out at sea – that is until the interconnector is available from Italy. But then again they are not even sure if the interconnector is going to be adequate supply,” he says.
Gauci-Maistre notes that the government seems to think that LNG will have the lowest cost and is moving in this direction.
Meanwhile, international oil and gas companies are once again becoming interested in exploring for oil in the Malta’s waters.
“Seismic surveys are going on offshore,” he says. “In the meantime some deep exploration is going to start as well,” Gauci-Maistre says, adding that drilling would comply with EU standards.
At the moment, Malta relies exclusively on imports for its energy needs, he says.
He recalls that companies have been searching for oil in Malta on and off since the late 50s but have not found any hydrocarbons. However, recent discoveries offshore Israel, along with exploration offshore Cyprus and a licensing round offshore Lebanon highlight the Mediterranean Sea’s oil and gas potential.
Malta is located not far from the oil-rich waters of Libya – which holds Africa’s largest proven reserves of sweet oil. “Even the previous government they had been searching but this time they’re all out,” he says.
Gauci-Maistre says potential oil and gas reserves in the Mediterranean are essential to help Europe reduce in reliance on imports, especially from Russia. “I think they have no choice but to look for it because that dependency is dangerous,” he says.
As we reach the Valletta International Airport, Heathcliff quips: “All this may bring fuel prices down. And that’s a good thing”.
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Previously on Energy Insider:
Putin’s Slick Iranian Oil Deal Upsets Sanctions
No End in Sight for Kashagan Oilfield Woes