Oil expert says health and safety standards in exploration agreement depend on oil company since Malta does not have specific environmental standards for offshore oil wells.
Former BP boss Tony Hayward, responsible for last year's Deepwater Horizon ecological disaster in the Gulf of Mexico, is said to be seeking more exploration and production assets offshore Malta after committing to a US$30 deal last week, in a two-well production sharing agreement held by Mediterranean Oil & Gas.
A Credit Suisse analyst report suggests that the venture between Hayward's London-listed Genel Energy and Mediterranean Oil & Gas - which already has a production sharing agreement for Maltese oil exploration - "goes further than a simple farm-in... The pair are also teaming up to find exploration and production assets off the coast of Libya and Tunisia as well as Malta," the report says.
But oil experts have raised questions surrounding both the timing and ultimately the scope of the announcement. Dr Peter Gatt, a geologist who specialises in the Malta continental shelf, told this newspaper that the proof of the pudding lies in how many active oil wells materialise as a result of this agreement.
"Ultimately the question to ask is whether this agreement results in the drilling of an oil well," Gatt said yesterday. "History teaches us that such agreements do not always result in active oil exploration efforts: Heritage Oil's contracts for Areas 7 and 2, where no wells were drilled, would be a case in point."
Gatt is not the first to raise questions concerning the proximity of the announcement to the next elections - oil exploration efforts are in fact often associated with the perception of 'good prospects for the future', and this has immediate benefits when used as a pre-electoral ploy.
Even if an oil well does materialise out of this deal, there will be questions asked about what environmental guarantees can be offered by Genel, in view of its CEO's earlier involvement with the Deepwater Horizon scandal.
Dr Gatt said that in such cases, health and safety standards really depend on the oil company since Malta does not have specific environmental standards for offshore oil wells.
"Tony Hayward is not much of an inspiration when it comes to such standards," he added.
Elsewhere, Credit Suisse describes Genel Energy as an "ambitious mid-cap London-listed company" which is building an impressive "exploration hopper" outside its core region of Iraqi Kurdistan.
A graphic illustration of this strategy was provided last week as the company unveiled two farm-in deals.
The first was a transaction landed Genel into Morocco, considered today as one of the world's up- and-coming oil destinations, while the second concerned the Malta agreement. The total investment of the two deals is said to be in excess of US$70 million.
Their agreement, which will see MOG receive 20% of the assets bought, will last a minimum of three years.
AIM-listed Mediterranean Oil & Gas Plc brings with it a more intimated knowledge of the areas than its larger rival, while Genel has the financial firepower to really take advantage of them. The FTSE 250 group Genel Energy Plc is estimated to have around US$1 billion of cash to spend.
Tony Hayward spent his entire career at BP, until the Deepwater Horizon accident in 2010 cost 11 lives, caused an unprecedented environmental disaster wiped tens of billions off the value of the business and brought his tenure at the top to an abrupt end.
In what has become a textbook case of how not to handle a disaster, Hayward made some serious errors: at the height of the furore he quipped that he wanted his "life back" and then nipped to the UK for a spot of sailing in the Solent.
But now his future is focused on the Genel Energy business which he bought together with financier Nat Rothschild through their Vallares investment vehicle. Genel is a relatively small, but successful, Turkish-based exploration and production company with assets concentrated in the geologically exciting but politically sensitive Kurdish market.
It has also been run, up until now, by a colourful and controversial boss, Mehmet Sepil - who was fined GBP1 million for insider dealing by the UK's Financial Services Authority- and partly owned by another Turkish businessman identified as Mehmet Emin Karamehmet, who is currently appealing against an 11-year jail sentence for embezzlement.
In what has been an incredibly busy week for Genel, it also announced it was taking its stake in the Miran gas project to 51% from 26% in a US$156 million deal with Heritage Oil, led by former mercenary Tony Buckingham, who also holds a production sharing agreement with the Maltese government for exploration offshore Malta.