News | Sunday, 28 February 2010

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Pancontinental Oil in legal dispute on Malta exploration

Matthew Vella
Pancontinental, the Australian oil company, is seeking legal advice over the Maltese government’s refusal to renew its exploration agreement.
The company was granted a licence in 2001 to explore two particular areas believed to hold world class oil prospects.
In 2008 however, further studies in the zones had to be postponed by six months on the request of the Maltese government until a dispute with Libya was resolved.
“We have had disappointments during the year, of which difficulty with our Malta project is the most prominent. We are currently making legal representations to the Government of Malta to secure the licences for the project. Regardless of the outcome, any activity here is likely to be some time in the future, due to the absence of a border resolution between Malta and Libya,” said Henry Kennedy, Pancontinental chairman, in the latest annual report for the company.
Boundary discussions between Malta, Libya and Tunisia, were announced in 2008 to also discuss oil exploration with Malta. Malta has been embroiled in a legal dispute with Libya over the demarcation of the continental shelf and the median line separating the two countries since the 1980s.
Pancontinental is now no longer visible on Malta’s oil licence map. In early 2009, Pancontinenal restarted operations after Anadarko, which had farmed in the area since 2006, withdrew from the permit due to the lack of progress on the border issue.
But the company said that in May 2009, “without any prior warning” it received a letter from the Oil Exploration Department claiming its exploration agreement expired in August 2008, because a July 2008 request from Anadarko for a two-year extension was not acceded to.
Pancontinental has written to the Department disputing the expiry of the agreement and is seeking legal advice from a firm of Maltese lawyers. Meetings are believed to have already been held with the Maltese authorities in January.
The other oil exploration group, Heritage Oil, which has a 100% interest in two major areas of Malta’s oil map, is expected to start some drilling towards the end of 2010.
The Canadian oil company was in 2008 warned by the National Oil Corporation of Libya that its licence area lies within the Libyan continental shelf, and a portion of this area has already been licensed to Sirte Oil Company. The directors of Heritage Oil wrote in the annual report that that the Libyan government’s claims are unfounded.

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