NEW OIL EXPLORATION AGREEMENT BETWEEN GOVERNMENT & AUSTRALIAN CONSORTIUM

An oil exploration agreement, the third in less than a year, was signed today at Castille between the Government and a consortium led by Hardman Resources of Australia. The Hon. Minister Joe Mizzi signed on behalf of the Government whereas Mr Scott Spencer, Director of Hardman, and Mr David Racher and Mr John Tarrant signed on behalf of the consortium.  Attending the signing ceremony were the Australian High Commissioner Mr Colin Willis and senior officials of the OPM.

The Agreement covers Blocks 4 & 5 of Area 3 to the east of Malta. The blocks have a total area of 2,900 square kilometres and lie mostly in waters 150 to 400 m deep, on the eastern edge of the Central Mediterranean, adjacent to the Ionian Sea. The blocks where first made available for exploration in 1980 and were held by Texaco between 1990 and 1992 under a Production Sharing Contract.  No drilling was however undertaken.

The oil industry expressed interest in the blocks on several occasions since 1992 but progress in negotiating an acceptable agreement could only be made recently after the Government revised the fiscal and operating terms in 1997.  Fruitful negotiations with the Hardman consortium commenced last May and were concluded in the past few days, thanks also to the positive outcome of the "Madonna Taz-Zejt" drilling currently in Gozo.

The Agreement calls for the undertaking of geological and geophysical work during an initial 18 month period and the potential drilling of a well - "Adeodata" - during a subsequent optional phase.  The consortium is bound to spend a minimum expenditure in the form of a specified work programme for each phase, bonuses, administration fees, rentals and training contributions.

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The Agreement follows, in less than a year, two similar agreements, one signed with AGIP in August 1997 and one signed with a consortium led by ROC Oil in May of this year. This noticeable increase in exploration activity is a clear manifestation of the oil industry's strong confidence in the Government's progressive approach in effectively and realistically adjusting to the ever changing operational environment of the exploration industry. Negotiations with other companies are currently being conducted in respect of other offshore acreage.