Issue link: https://maltatoday.uberflip.com/i/349229
maltatoday, SUNDAY, 20 JULY 2014 6 News MATTHEW VELLA MALTA'S most anticipated oil prospects in 20 years fizzled out as quickly as they had started: weeks before plugging the Hagar Qim well in June, oil exploratory firm Medi- terranean Oil & Gas (MOG) sold its shares to a Falklands oil firm for £29.3 million (€37 million), at a premium of 31.1% over its average share price. MOG held a 25% interest in the Area 4 production sharing contract, while Genel, of former BP chief ex- ecutive Tony Hayward, owned the remaining 75% interest in Area 4. Genel's subsidiary, Phoenicia En- ergy, was the operator of the Hagar Qim well, targeting 250 million bar- rels. But Rockhopper, the firm that acquired MOG on 23 May, already knew that the prospects in the Mal- tese well would amount to nothing. The two companies exchanged confidential information about their subsidiaries and assets way back in February, in a confidential agree- ment that preceded the acquisition. In its assessment of MOG, Rockhop- per ascribed "no value" to the Hagar Qim exploration well; instead spec- ulating that acquir- ing MOG would give it "access to better exploration assets such as the Monte Grosso ex- ploration prospect in the southern Apennines region of Italy." Behind Rock- hopper's interest, whose core busi- ness is located in the Falklands, was also gaining access to the Libyan and Tunisian basins to- gether with Genel, and for prospects in offshore Mon- tenegro: MOG is one of the bidders for 13 blocks cov- ering 3,000 square kilometres. The country claims it has enough resources to cover its oil and gas requirements. Exploratory drilling in the Hagar Qim well was started by Genel in May and then abandoned in June when no indications of hydrocar- bons were found. The company was targeting field sizes of 250 million barrels. Drilling for oil is neither cheap, nor quick: MOG spent €8.3 mil- lion just in data collection for Area 4. Even if they found indications of hydrocarbons, MOG chief execu- tive Bill Higgs had said it would take five years before they could produce a deliverable hydrocarbon product like oil. When he spoke to MaltaToday in 2012, Higgs discounted claims that oil firms were only using Malta as a springboard for Libya or to bump up their share price. "The market is very pure. It does not value ideas. It gives you the funds you need only if you drill wells – you have to get the drill-bit into the ground." In comments to MaltaToday in March 2014, Tony Hayward stood by claims that Malta's geology was looking good, but he also played down expectations. "Oil and gas ex- ploration is never a sure thing. We estimate that the chance of success is around 1 in 5, but with drilling set to begin around the end of the first quarter of 2014, we will know soon enough." With this '20% chance' in mind, Genel carried out a "strong and effi- cient operational performance that brought the well in ahead of sched- ule" – a spokesman had told The Times – and quickly moved the No- ble Paul Romano oil rig to offshore Morocco, to drill the Sidi Moussa block in which Genel holds a 60% working interest. The government is expected to en- ter into talks with Phoenicia Energy Company and Melita Exploration Company – the subsidiaries of Genel and MOG respectively – apart from having to confirm whether consent is required for the indirect change of control of Melita, to new owners Rockhopper. In production sharing contracts, it is the operator that has to pay the government licence fees to carry out studies and drill for oil or gas. Failed interest An oil firm that sold off its small interest in Area 4 to MOG for just $1 had taken a chance at suing the oil firm, when it learnt that Tony Hayward's Genel had acquired an interest in the same block for $10 million (€7.5 million). Leni Gas & Oil claimed it had been misled into selling its 10% stake in one of the blocks in Area 4 for far less than it was worth. Leni Gas claimed its asset was worth a lot more, saying that it would not have sold its interest for $1 had it been aware of Genel's in- terest. But Mr Justice Males in the Com- mercial Court of London ruled that owner David Lenigas was "neither legally nor morally committed to the sale." Handing down the High Court judgement in MOG's favour, he said: "Mr Lenigas had already ob- served in an internal email to Mr Ritson [LGO chief Neil Ritson] that: 'We can still dump the deal next week'." Leni Gas did not lodge an appeal. MOG's other interest in Malta is in offshore Malta Area 3, in partner- ship with Capricorn Malta, a sub- sidiary of Cairn Exploration, which holds a 60% interest in the area. Area 4 has largely been overlooked in Malta's oil exploration history. In 1993, Amoco had drilled Tama-1 and although the well gave indica- tions that oil was present, it was not in commercially viable quantities. Tama-1 was drilled in Block 3, to the west of blocks licensed to Medi- terranean Oil and Gas. Rockhopper ascribed no value to Hagar Qim well when talks to acquire Mediterranean Oil & Gas started back in February Oil firm said Malta well had 'no value' when it purchased concessionaire MINISTRY FOR SUSTAINABLE DEVELOPMENT, THE ENVIRONMENT AND CLIMATE CHANGE CALL FOR EXPRESSION OF INTEREST Technical and Economic Evaluation of Potential Green Economy Actions The Ministry for Sustainable Development the Environment and Climate Change (MSDEC) is in the process of developing an action plan to support and incentivise the Greening of the Economy and is therefore interested in receiving Expressions of Interest from candidates who are willing to carry out technical and economic evaluations of one or more identified potential actions and initiatives for the greening of the economy. Submissions will be received at the Procurement and Supplies Directorate, at No 6, Qormi Road, St. Venera up to 10.00 am on Friday 8 August 2014. A sample Expression of Interest in PDF format is available for downloading on the Ministry for Sustainable Development the Environment and Climate Change website: http://www.msdec.gov.mt or collected from the said Procurement and Supplies Directorate. Further information and clarifications can be obtained through a request via e-mail on contracts.msdec@gov.mt. ! Bill Higgs Tony Hayward