Malta to launch 'spudding' of first offshore oil well in decade

The initial drill of Malta's first offshore oil exploration well in more than a decade will start within weeks, the Malta's Transport and Infrastructure Ministry announced in a statement Thursday. Originally timed for the end of first quarter 2014, the "spudding" has been delayed by rig preparations, Transport and Infrastructure Minister Joe Mizzi told Xinhua last week. "There are some technicalities to be cleared so it will be delayed by two weeks," Mizzi said. The 'Hagar Qim' well, the first deep water well to be drilled in Maltese waters, will target reservoirs at a depth of approximately 2,500 metres (7500 ft) in what is known as Area 4, a 5,700-square km (3420 sq. mi) contract area 130 km (78 mi) south of this archipelago in the central Mediterranean, according to the statement. The drilling rig is currently undergoing final inspection and certification tests, the infrastructure ministry announcement said, adding that it was informed that the inspection and any subsequent maintenance work would be completed in weeks, before the rig moves to location. The rig, the "Paul Romano," will be operated by Noble Energy (NBL) of Houston, Texas over a two-year contract, drilling in waters 450m (1350 ft) deep, a Genel announcement said. The principals in the Production Sharing Contract (PSC) with the Maltese government are Genel Energy (GENL), the majority partner, and Mediterranean Oil and Gas (MOG). According to Tony Hayward of Genel Energy, the new well, which is Genel's first since the company was acquired by Hayward and other investors, including Nathaniel Rothschild, for over 2 billion U.S. dollars in 2011, is within an area with the potential for field sizes of at least 250 million oil barrels, he told local press here earlier. Hayward added that he sees a one in five chance of success in Malta. Genel acquired its 75 percent stake in the new Malta well, the first in over a decade, from Mediterranean Oil and Gas, which now holds a 25 percent share in the venture. In the past, 11 wells have been drilled offshore of Malta by various international oil companies without any commercial finds, discouraging further exploration, along with the fact of overlapping maritime claims among the neighboring states, the infrastructure minister explained earlier. Mizzi has said however that given that geological structures off Malta have been found to be analogous to oil or gas producing areas in the central Mediterranean, there are very probably commercial quantities of fuel that may be exploited for the country's energy supply and to generate funds. Recent discoveries in the eastern Med, such as gas fields off Israel, have also given renewed impetus to new exploration. North of the Maltese archipelago, Mediterranean Oil & Gas began seismic prospecting last week, in what is known as Area 3, in a planned 20-day study with Cairn Energy, Mr. Mizzi has said. Mr. Hayward is the former chief executive of British Petroleum (BPL) who was forced to resign following the Deepwater Horizon oil spill disaster in the Gulf of Mexico, which occurred on April 20, 2010. BP pled guilty to criminal charges and settled a class action suit by victims for 9.2 billion U.S. dollars. Last month, the U.S. federal government lifted its ban barring BP from securing new contracts in the U.S. The Genel CEO told local press here last month that since the BP disaster the industry had adopted measures to reduce the chance of offshore spills, such as an upgraded blow out preventer and having a capping stack on hand. In addition, risk assessments have been carried out for the first time ever before the start of drilling, the report added. Genel is the biggest oil producer in war-ravaged Iraq's northern Kurdistan region. Mr. Mizzi has offered assurances that regulations will be followed to a 'T' in Malta. Speaking at the Economist Roundtable Conference here on March 7, Malta's infrastructure minister said that the government was doing its utmost "in accordance with European legislation and International Conventions to ensure ... the highest level of safety. Malta depends on the sea for its very own survival and therefore we are committed to ensure protection of the marine environment which after all is a common heritage to us all."