No fixed price for gas in Malta's new deal with BP, minister says

The cost of Malta’s natural gas supply will vary in line with international markets, rather than follow fixed pricing, following a new deal struck with BP, Energy Minister Miriam Dalli said on Monday.

On Sunday, both Dalli and prime minister Robert Abela announced that Malta had secured an agreement for BP to provide Malta’s supply of gas until May 2027. Malta’s current deal with Socar was set to expire in August.

Following Sunday’s announcement, PN called on the government to publish the price of the deal.

On Monday, Dalli said the new deal with BP is “based on international standards, both in terms of the agreement and the price."

As is customary in the energy sector, Dalli said, “prices vary according to markets. This agreement is based upon the TTF, the European benchmark for natural gas”.

When pressed about the price of the deal, Dalli said the price would vary in line with the source of supply and international pricing.

“The current unit price from the interconnector is around 12c4,” Dalli said. “With the new deal we are looking at a total unit price of approximately 11c9”.

“There were times when the price of a unit of electricity was higher than that and others when it was lower, so it varies,” she said.

The TTF (Title Transfer Facility) is a virtual trading hub based in the Netherlands, allowing suppliers and consumers to trade ownership of Europe’s gas supply within its pipelines.

The TTF is widely considered the primary benchmark for natural gas prices across the continent.

In a Facebook post, Dalli said experts had advised against a longer agreement because Europe’s LNG supply was expected to increase in 2027.

She said the deal was structured along the lines of standard agreements previously signed by BP, with the energy giant putting forward a draft template of these agreements on its own website.

Agreement was directly between Enemalta and BP

Meanwhile, replying to questions from Times of Malta, a spokesperson for the energy ministry confirmed that “prices are not fixed, but tied to the TTF Index”.

When asked whether the deal was negotiated or signed by Electrogas, the consortium set up to operate Malta’s LNG plant, the spokesperson said “the agreement was concluded directly between Enemalta and BP following a competitive process”.

The government has “already started working” on arrangements for LNG provision beyond the stopgap BP agreement, the spokesperson said.

Although Malta’s second interconnector is set to be operational by the time the deal expires, “LNG remains a key component of Malta’s energy mix, together with the interconnector and renewable sources,” the spokesperson added.

Meanwhile, Abela told parliament on Monday that securing the deal at a time of such volatility in the markets was no mean feat.

He said the deal would provide two major guarantees, namely supply and price stability. Abela slammed what he described as a “fear campaign” spread prior to the election suggesting that Malta’s energy provision would not be guaranteed or prices would rise.

In a statement, the Labour Party said the agreement “has completely dismantled the fear campaign that the PN sought to create,” pointing out that the opposition has yet to name an energy spokesperson.