Malta eyes new short-term gas deal amid uncertainty
By the end of 2027 the LNG market is expected to be more favourable
The government will enter into a “short-term” gas purchasing agreement after Malta’s ongoing hedging system expires in August, Energy Minister Miriam Dalli said.
That agreement should take Malta’s gas supply to the end of 2027 when the LNG market is expected to be more favourable, she said. “Enemalta is making sure to have a secure supply of LNG at a good price,” Dalli said on Thursday.
As the Iran war progressed, fears have grown that Iran’s chokehold on the Strait of Hormuz, through which a fifth of the world’s oil and natural gas supply passes, would lead to widespread energy shortages across Europe.
Meanwhile, several of the world’s largest energy companies have scrapped their hedging agreements, citing force majeure following attacks on key energy infrastructure.
Speaking to Times of Malta, Dalli said the government’s current purchase contract is pegged to oil prices, with “Enemalta hedging from time to time according to market conditions”.
Demand
Hedging is a risk management tool that allows Enemalta to pay a fixed price for gas over an extended period regardless of market prices.
Asked if clients will continue paying fixed prices after October, the energy minister said: “The kind of contract we have depends on what suppliers are offering. Enemalta is looking at different suppliers to get the best possible contract”.
She said the decision to seek out a short-term contract from August is based on the advice of international experts. The government will only seek a long-term contract by the end of next year because the market is expected to have a larger number of suppliers and more supply of LNG.
The government’s energy company, Enemalta, can supply a total of around 960 megawatts through several sources. Malta’s total energy demand usually hovers between 400 and 550 megawatts, but can significantly increase on hot summer days.
Malta’s two main sources of energy come from the LNG power plant in Delimara and the Malta-Sicily interconnector.
Around a tenth of the country’s energy supply also comes from solar power. Other sources of energy include two diesel-powered gas turbine generation plants and standby power generators that can also be switched on in cases of emergency.
A second Malta-Sicily interconnector is currently being built.