The agreement – in the form of an 18-year supply of liquefied natural gas (LNG) – was expedited by former PM Joseph Muscat.
A 7-year fixed-price LNG purchase agreement signed by the Muscat government – hedged against fuel price rises – has contributed to Malta’s energy costs over the past 12 months remaining flat.
In addition to the UK continuing to see a hike in energy bills, its gas imports are predicted to rise dramatically over the next 30 years, which could result in even higher costs.
According to Dorian Ducka, former Deputy Minister of Energy and Industry for Albania, Malta is in a better position than other EU islands which haven’t yet switched to gas.
Although Malta’s LNG deal with SOCAR was initially met with criticism, the price-freeze – set to expire in March – has already reduced three years of higher payments within six months.
As Malta’s fixed price contract nears its end and, with no mitigation plans in place, Prime Minister Robert Abela has initiated a price freeze with £200m worth of government handouts.
The deal led to energy company ElectroGas retrofitting an oil power station located in the south of the island. Capable of operating using LNG, CO2 emissions from the plant were reduced by over 50% from 2017 to 2020.
“The ElectroGas project has significantly reduced the environmental impact and moved Malta to a more sustainable and reliable energy supply,” said the company.
“That’s good news for the people of Malta and better news for the planet.”
With Russia-Ukraine tensions rising, the EU’s reliance on Russian natural gas is expected to result in a dramatic increase in energy costs.
Japan and the US have already announced plans to transport LNG to Europe to help supplement the EU’s existing gas reserves.
The UK currently relies on Russia for less than 5% of its natural gas supply, which could help minimise the extent of energy prices hikes.