While finding oil could benefit Malta’s economy, the country has far more urgent priorities, such as renewable energy and human resources.
Malta’s ambition to become an oil-producing country was first kindled in 1953 when oil was discovered close to Ragusa, in Sicily. Wells since dug onshore in Naxxar, Żabbar and Għar Lapsi have produced no results. Yet, this ambition seems to linger on even if the government is ambiguous on prioritising oil drilling in troubled Mediterranean waters.
Finance Minister Clyde Caruana has announced that a Maltese subsidiary of a Jersey-based oil and gas drilling company was granted an exploration licence to drill in two maritime zones off southeast Malta. In his budget speech in October 2021, he had declared that “Malta has no oil and gas”.
Still, the government appears sceptical about the importance of oil exploration in our waters. This was confirmed by Energy Minister Miriam Dalli. “We are not interested in oil, definitely not for energy production,” she told a breakfast meeting on Malta’s Energy Agenda: Making the Green Transition a Reality, organised by the European Commission with Times of Malta.
These apparently contradictory attitudes on the oil exploration sector have surprised some experts, who say that discovering offshore oil and gas in areas in which Malta claims to have exploration rights could benefit the island’s economy beyond energy generation.
At the same meeting, other panellists argued that the revenues could be invested back into renewable energy and that oil is also used to make other materials such as road paving and plastic.
The reality, though, is that the prospects of a smooth path to drill in offshore maritime zones claimed by Malta is far from guaranteed.
The 1980 incident – when Libyan gunboats threatened an oil rig owned by the Italian company Saipem that was drilling on behalf of the Maltese government 68 nautical miles southeast of Malta – shows how unclear the drilling rights for oil and gas in the Mediterranean are. The International Court of Justice ruling in 1985 dealt only with the delineation of a small part of the contested territory.
An unresolved dispute with Italy over drilling rights in the eastern reaches of Malta’s continental shelf shows how politically sensitive drilling for oil in offshore fields claimed by neighbouring countries is. Because of these overlapping interests, there is no reason to believe that, even if oil or gas were found under the newly granted licence, its commercialisation would be any less complicated.
In the past, the prospect of striking oil has been used by political parties to score points, especially before elections. But the government does well not to generate great expectations for what the discovery of oil or gas could mean for Malta’s economy. There are far more urgent priorities that need to be addressed, including that of investing in renewable energy.
Focusing on redefining the economic model to make it more resilient and sustainable must be the top priority for the coming decade. Some of the Middle Eastern oil-producing countries have developed an economic model that exploits their oil revenue at the expense of developing their human resources. They are increasingly dependent on the importation of labour to promote growth.
This model is not what Malta needs. In the last decade, the country’s economic growth has been achieved largely through importing thousands of specialised and low-cost workers from third countries. Investment in education needs to be reviewed as many business leaders rightly argue that the educational system is not producing the right type of skilled workers that the economy needs.
While drilling for offshore oil and gas can continue to be pursued, addressing the economy’s structural weaknesses must remain the top priority for the government.