The government has awarded two offshore areas to the Maltese subsidiary of a Canadian company for oil and gas exploration and exploitation.

The offshore areas, known as Areas 2 and 7 cover an area of 18,000 square kilometres south and south-east of Malta close to the median line with Libya. They were awarded to Heritage Oil International Malta Ltd, a subsidiary of Canadian oil and gas company Heritage Corporation of Calgary.

The 30-year contract includes a signature bonus of $2 million to be paid to the government, expenditure of at least $22 million in the first three years of the contract, annual rentals on a rising scale payable to the government, starting from $240,000, and annual scholarship and training contributions of $100,000.

The work programme for the first three years will consist mainly of a detailed seismic survey and the drilling of at least one exploration well. Both areas were previously held by Norwegian company TGS Nopec.

Should oil or gas be discovered, Heritage will retain part of production to recover costs while the remainder will be shared on a pre-agreed scale between the company and the government.

The exploration licence was awarded to the company this morning by Resources Minister Ninu Zammit.