OFFSHORE AREA NORTH-WEST OF GOZO AWARDED TO ENI FOR EXPLORATION

An offshore area of 1320 square kilometers, located north-west of Gozo, was today awarded for petroleum exploration to the Italian giant Eni SpA. The Prime Minister, Dr Eddie Fenech Adami, as Minister responsible for oil exploration, signed the contract on behalf of the Government whereas Eni’s chief operating officer Dott Stefano Cao signed on behalf of the company. The signing ceremony, which took place at the Auberge de Castille, Valletta, was attended by the Permanent Secretary at the Office of the Prime Minister, Mr Joseph R Grima, the Attorney General, Dr. Anthony Borg Barthet, and representatives of Eni and the Italian Embassy.

The award is made under a Production Sharing Contract for a term of 30 years, the first 6 years of which are allocated to exploration and the rest to exploitation. Any petroleum found shall be produced as efficiently as possible and in line with good international oil-industry practice, with particular emphasis on the protection of the marine environment. In return for the investment and risk, Eni will retain part of the petroleum produced to recover costs and make a fair profit. A 35% income tax on profits made in this way is also payable to the Government. The executionof the work programme, including the development and production phase, will be expedited by an advisory committee composed of representatives of Eni and the Government.

The contract calls for the firm drilling of an offshore well in the first contract year. The well has the same exploration objective as that of south-east Sicily where oil is produced from a number of offshore and onshore fields.

Negotiations with Eni commenced in January 2000 and were concluded a few weeks ago. The company paid the Government the sum of US$3 million on the signing of the contract. Other financial obligations include the yearly payments of administration fee, rentals and other contributions amounting to about US$ 200,000.

First established in 1953 by the Italian Government, Eni was privatised in 1994 and is currently ranked as the 6^th largest oil and gas producer in the world, with interests in over 70 countries, a capital of over 55 billion euro and a work force of about 70,000 worldwide. It produces over 1.4 million barrels of oil equivalent every day and recent discoveries will allow it to reach the 1.5 million barrels mark by the year 2003. The company has an excellent working relationship with Malta and since 1972 has participated in the drilling of 4 offshore wells. The last one was drilled in partnership with Amoco in 1993 in an area to the south of Malta.

A second agreement was signed with Eni in which the Government gave its consent to the laying of a gas-pipeline on Malta’s continental shelf on its course from Libya to Sicily. The agreement was also signed by a member of the pipeline project management in which Libya’s National Oil Corporation has a participation. The agreement safeguards Malta’s interests in the exploration and development of the continental shelf and the marine environment. The pipeline also provides an opportunity for Malta to obtain a supply of gas for its power stations. To this end, a separate agreement was signed today between Eni’s affiliate Snam Spa and Enemalta to study this possibility.