Oil and Gas Exploration

Malta's central location in the Mediterranean and its proximity to proven hydrocarbon systems with producing oil and gas fields in offshore Sicily, Libya and Tunisia makes Malta’s offshore acreage attractive for petroleum exploration. 
 
Hydrocarbons have been produced for several decades in areas adjacent to offshore Malta. Notable fields include Ragusa (200 MMbbl), Gela (150 MMbbl), Vega (125 MMbbl) and Irminio (70 MMbbl) in southeast Sicily, Ashtart (310 MMbbl) and Miskar (800 Bcf) in offshore Tunisia and Bouri (3.7 Bbbl & 1.9 Tcf) in offshore Libya. Malta has prospective petroleum geology with geological formations which are analogous to those found in these producing fields. Malta enjoys economic, political and social stability and offers excellent quality of life and a safe environment making exploration opportunities in Malta competitive and attractive.

 
 Malta's Designated Areas for oil and gas exploration
 Malta’s designated areas for oil and gas exploration (Source for fields: Drillinginfo 2017)
 
 
Malta’s offshore acreage is divided into seven exploration and production designated areas covering an area of over 75,000 square km. Area 3 and Area 4 are subdivided into eight and seven blocks respectively. The offshore acreage has been covered by extensive seismic surveys but tested by a limited number of exploratory wells. Presently, Area 2 and Area 7 are licensed to Heritage Oil International Malta Limited (a subsidiary of Heritage Oil Limited) under a Production Sharing Contract, while Blocks 1, 2 and 3 of Area 3 are licensed to Edison International Spa under an Exploration Study Agreement.
 

The Continental Shelf Department is responsible for licensing and regulating oil exploration activities on Malta’s continental shelf. The following are the main responsibilities:

  • Promoting Malta’s petroleum exploration opportunities;
  • Granting oil exploration and production licences under Exploration Study Agreements and Production Sharing Contracts;
  • Monitoring the contractual obligations of oil companies;
  • Surveillance of exploration activity on Malta’s continental shelf;
  • Provision of technical advice in relation to oil exploration, particularly the identification, evaluation and assessment of oil and gas prospects;
  • Administration of an oil exploration geological and geophysical database.

 

 

 
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Exploration History

Oil exploration in Malta started in the 1950's shortly after the discovery of oil in Triassic dolomites at Ragusa in southeast Sicily. D'Arcy Exploration (BP) was granted an exploration licence in 1954 and drilled the first onshore well in 1959. Following the enactment of the Continental Shelf Act in 1966, the offshore acreage was opened for exploration in the 1970's. Four wells were drilled between 1971 and 1973 by Shell, Aquitaine and Home Oil. Since that time another eight wells have been drilled, two of which were suspended (Medina Bank 1 and Gozo 1). Although some wells encountered hydrocarbons such as the offshore wells Alexia 2, Lampuko 1 and Tama 1 and the onshore well Madonna Taz-Zejt 1 yet, so far, no commercial discovery has been made.


Year

Block/Area

Operator

Well

Well Status

1959

Onshore Malta

BP

Naxxar 2

Dry

1971

Blk 6, Area 3

Aquitaine

Aqualta 1

Dry

1972

Blk 3, Area 3

Home Oil

Home 1

Oil shows

1972

1973

Blk 3, Area 3

Shell

MS-A1

MS-B1

Dry

Dry

1980

Area 2

Texaco

Medina Bank 1

Dry (suspended)

1982

Blk 8, Area 3

Reading & Bates

Gozo 1

Dry (suspended)

1984

Blk 3, Area 3

IEOC (Agip)

Alexia 2

Tested Oil

1992

Blk 3, Area 3

Amoco

Valletta 1

Dry

1993

Blk 3, Area 4

Amoco

Tama 1

Oil shows

1999

Onshore Gozo

Government

MTZ 1

Tested Gas

2002

Blk 2, Area 3

ENI

Lampuko 1

Oil & gas shows

2014

Blk 7, Area 4

Genel Energy

Hagar Qim 1

Dry


Summary table of Exploratory Wells

Exploration Database

The Continental Shelf Department has an extensive database of geological and geophysical data from past exploration activity. This includes:
  • Over 50,000 km of 2D seismic data and three 3D seismic surveys;
  • Regional reports and Area/Block reports;
  • Data from 13 exploratory wells: well reports, well logs, cores and cuttings;
  • Good coverage of gravity and magnetic data;
  • Other data such as satellite seep studies and geochemical sea-bed sampling surveys. 

Map showing location of seismic data (see also multi-client seismic data below)


This data is available for viewing at the Continental Shelf Department and oil companies may request a dataroom visit by contacting the Director General, Continental Shelf Department on dgcs.csmalta@gov.mt. Companies will be required to enter into a confidentiality agreement prior to visiting the dataroom.

Multi-client Seismic Database

TGS acquired seismic data between 2001 and 2004 on a multi-client basis. Following an agreement with Government in June 2014, TGS reprocessed a large portion of the seismic data. The reprocessing has improved the seismic imaging significantly and also improved the imaging of the deeper data. The reprocessing resulted in effective multiple attentuation and improved noise attenuation. This data is available for viewing at TGS and copies of the data can also be purchased from TGS through a multi-client licence.

For more information contact TGS directly on amesales@tgs.com.
Map showing location of TGS 2001-2004 multi-client seismic data

Petroleum Legislation

The Petroleum (Production) Act (Cap. 156), the Continental Shelf Act (Cap. 535) and subsidiary legislation issued under these acts provide the legislative framework under which the Government of Malta issues and regulates exploration and production licences (under Exploration Study Agreements or Production Sharing Contracts) to oil companies having the necessary technical and financial capabilities.

Applications for exploration or production licences can be made either through a bid round process or through an open door policy in accordance with the Petroleum (Production) Regulations. Presently, Malta adopts an open door policy for the acreage that is open for licensing. Interested companies are invited to contact the Director General, Continental Shelf Department on dgcs.csmalta@gov.mt for more information on the application process.

The principal terms of the Model Exploration Study Agreement include:


Study Area:

One or more Blocks/Areas on offer.

 

Term of Agreement:

The term of the Agreement is usually twenty four months which may be extended.

Work Programme:

Contractor is required to execute a technical work programme for the Study Area which usually includes the acquisition of new seismic data.

Conversion to a PSC:

Contractor has the option to enter into negotiations for the conversion of the Agreement to a PSC


The principal terms of the Model Production Sharing Contract are summarised below:

Contract Area:

One or more Blocks/Areas on offer.
Production Sharing:

Profit Oil is shared in varying proportions determined by production rates and profitability.

Term of Contract:

Thirty years made up of an Exploration Period of six years and a Production Period of twenty four years. The Exploration Period is usually divided into two or three phases.

Taxation:

Contractor is charged income tax at 35% on its profits.

Relinquishment:

A minimum of 25% at the end of each Exploration Phase. At the end of the Exploration Period, the Contractor retains only the Production Area(s).

Deep water Incentives:

For developments in waters exceeding 200m there is a 50% investment allowance of initial development costs. Depreciation is calculated over 3 years instead of 4 years.

Work Programme:

Companies making offers are expected to propose details of exploration activities and related expenditure. A minimum of one exploration well in each Exploration Phase is compulsory.

Natural Gas:

The Model provides parameters for the exploitation of Natural Gas.

Environment Protection:

Contractor is required to protect the environment and the health and safety of workers during petroleum operations.

Assignment:

Contractor may assign its rights and obligations to an Affiliate and, upon prior consent of Government, to third parties.

Cost Recovery:

Contractor is entitled to recover all costs incurred in exploration and exploitation by retaining not more than 75% of Net Production in any one year.

Arbitration:

Recourse to settlement of disputes by International Arbitration is provided in the Model.



Education and Training

In October 2015, the Continental Shelf Department entered into a Memorandum of Understanding with the Department of Geosciences within the University of Malta. The Continental Shelf Department provided a grant to the University of Malta to assist with the purchase of specialised equipment, software and books and also to assist in the engagement of visiting experts from foreign universities and industry to lecture on the course.

The Continental Shelf Department is committed to invest in education and training within the oil and gas sector.