680,000 Documents Leaked To Daphne Project Originate From Electrogas
The Daphne Project is working on some 680,000 documents from the Electrogas consortium behind the Delimara power station that had been leaked to Daphne Caruana Galizia a few months before her assassination last October.
The cache of documents includes the government’s entire contract with Electrogas that it signed in April 2015 and published the following year in a heavily redacted format.
The first story, published this evening, quotes energy experts warning that the contract means Maltese taxpayers are losing out on tens of millions of euro. The contact binds Enemalta into purchasing €131.6 million worth of liquefied natural gas from Electrogas every year for 18 years. Electrogas in turn has agreed to purchase LNG from Azeri state-owned company Socar, one of the three Electrogas partners, for ten years. For the first five years of the contract, Electrogas must purchase LNG from Socar at a fixed rate of €9.40 per unit. Socar isn’t producing the LNG itself but rather purchasing it from energy giant Shell and selling it off to Electrogas at an estimated $40 million profit.
For the final five years, the price will be pegged to the Brent oil index, with each unit of gas costing 14% of the price of a barrel of oil. Socar’s deal with Shell is also tied to oil, although the exact terms of the deal are unknown.
The issue revolves around why Electrogas isn’t purchasing its LNG directly from Shell but instead paying millions to Socar to act as a middleman.
“If I were a Maltese taxpayer I would want to know why such a poor deal had been signed and why a Socar subsidiary had been brought in as a seller of LNG, even though Socar is not supplying gas from its own productions,” energy expert Simon Pirani told The Guardian.
UK consultancy firm Poten described the arrangement as “unusual”.
“Typically, one would expect the LNG supplier, in this case Shell, to contract directly with the project,” it said.
Two London-based energy analysts, who chose to remain anonymous, also questioned Socar’s role in the supply chain and one of them estimated that the Azeri company last year got paid double the LNG market price for Enemalta.
Moreover, oil and gas prices have crashed since 2015, a situation Malta could not have foreseen but one that made its deal with Socar look like poor value.
However, The Guardian questioned why it has not yet redrawn or cancelled the agreement, similar to how Lithuania had secured a price cut from its supplier Statoil and how Italian energy company Edison went to court to reduce the cost of its deal with Algeria.
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