23 - 29 March 2000

Offshore oil exploration producing encouraging results

by Franco Aloisio

The first year of operations of an Australian oil exploration consortium in Malta has been very productive and the consortium has already achieved encouraging results.

Alan R. Burns, the Chairman of Hardman Resources NL - an Australian company having a 90 per cent stake in the consortium which is carrying out offshore oil exploration in Maltese territorial waters - said in the company's annual report that work in Malta has been encouraging.

"In the offshore Malta project, technical work during the first contract year has produced encouraging results," said Mr Burns.

Hardman Resources together with Golden Gate Resources, which holds a 10 per cent stake in the consortium, had been awarded an Exploration Study Agreement (ESA) in 1998 over offshore blocks four and five. These blocks cover 2,900 square kilometres, 60 kilometres east of Malta.

The blocks which the Australian consortium are exploring are located south-east off the Italian oil fields offshore Sicily.

The largest of these fields, Vega oil field, was discovered in 1981 and is reported to contain 300 million barrels of recoverable oil. The Vega oilfield is located about 70 kilometres from Blocks 4 and 5.

Previous seismic work by the Maltese Government in the 1980s and Texaco during the period 1990 to 1992 resulted in the identification of several prospects within Blocks 4 and 5, but none of these has been tested by drilling.

The prospects are located on the same geological trend as the offshore Italian oilfields.

The Australian consortium has already carried out satellite and seismic studies in this area and has identified oil deposits offshore which seep from the seabed 400 metres deep.

The consortium is now planning to drill for oil in these four areas. One of the four areas has been earmarked for drilling and has already been named the "Adeodata" oil well.

However the decision to start the drilling phase depends on the will of the Maltese government. A decision on this matter is expected in the coming months.

The preliminary results already indicate the presence of substantial oil deposits in these sites and the ESA may be converted into a Production Sharing Contract (PSC). Under this contract, which will have to be negotiated in the coming months, Hardman Resources will set up their own oil rig and start drilling for oil.

Hardman is already stating in its quarterly reports that it will seek additional partners to fund the drilling phase of the exploration. Government sources indicated that this possibility is being actively studied, while the Maltese government has to be further briefed on the results of the studies carried out by the Australian consortium.