Malta offers incentives to European offshore exploration companies

Malta offers incentives to European offshore exploration companies The Mediterranean Oil & Gas Plc will begin drilling off the coast of Malta soon, encouraged by new drilling incentives, according to Bloomberg Businessweek.

Lately, Malta has been offering incentives to companies in order to promote offshore oil drilling. According to Tony Hayward, CEO of Genel Energy Plc, Europe's energy policy is in disarray due to the closure of several gas plants, which are being replaced with cheaper coal-powered plants. Because oil returns have been usually low recently, companies are looking for ways to make a better return on their investment. And thus, Malta sees an opportunity to attract companies that want to drill offshore, according to Bloomberg.

"It is very hard to attract capital, and investors need greater security and stability before they will make a long-term commitment, which oil and gas is," Hayward said, according to Bloomberg.

Offshore drilling is beginning to look less profitable for companies, Motley Fool reported. Citigroup began warning investors of a slowdown in offshore drilling. Many other companies have begun downgrading offshore oil companies as well, the source said.

The reason for the poor grades is that many analysts, the Motley Fool reports, believe that the market is becoming oversupplied and that exploration for new cites is slowing down.

More information on global offshore E&P outlooks can be found on PennEnergy's research area.

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