Maltese taxpayers could be losing tens of millions of dollars per year in an energy deal with Azerbaijan, according to expert analysis of leaked files.
A whistleblower gave a cache of data to Daphne Caruana Galizia, the Maltese investigative journalist who was killed by a car bomb last October.
She was not able to publish her findings before her death. But the leaked material was then shared with the Daphne Project, which has been working to complete her reporting. The consortium of 45 investigative reporters from 18 news organizations in 15 countries, including the Organized Crime and Corruption Reporting Project (OCCRP) and the Guardian, was organized by Forbidden Stories.
Three energy experts in London have examined the files, which contain pricing information that Malta’s Prime Minister Joseph Muscat has so far refused to publish.
The material concerns a deal, worth about €1 billion, under which Malta has agreed to import all of the liquefied natural gas (LNG) needed to supply its power stations for the next 10 years from SOCAR, Azerbaijan’s state-owned oil and gas company.
Malta is “losing money hand over fist” on the contract, said an expert who agreed to speak on condition of anonymity, adding that the government should push to renegotiate.
The deal was signed in 2015 and deliveries began last April. Since then, through the end of March 2018, Malta has paid SOCAR at least €131.6 million (US$ 153 million) for its gas — at nearly twice open market rates.
SOCAR is owned by the Azerbaijani government, which human rights groups and other independent observers accuse of massive corruption, imprisoning journalists, and suppressing political opponents. President Aliyev’s administration has dismissed the allegations, calling then “biased, groundless, and provocative.”
The Daphne Project has already revealed that Azerbaijan’s ruling families used a Maltese bank to funnel millions of dollars into lucrative investments around the world.
Azerbaijan may be a major oil and gas producer, but did not produce or trade LNG at the time the deal was signed. In fact, SOCAR is not even supplying the gas from its own reserves. Instead, it buys LNG from Shell, the global oil company, and then sells it straight on to Malta at a profit.
SOCAR does not actually handle the gas, organize its transportation, or add value through any physical process.
“If I was a Maltese taxpayer, I would want to know why such a poor deal was signed,” said Simon Pirani, a senior visiting research fellow at the Oxford Institute for Energy Studies.
