Malta has secured renewed European Council backing to extend a special exemption that keeps the island nation eligible for potential European Union funding for a stalled gas and hydrogen pipeline to mainland Europe.

EU energy ministers agreed Friday to extend the derogation for Malta and Cyprus, two island-states physically isolated from the trans-European gas network.

The decision ensures Malta's pipeline project retains its status as a Project of Common Interest (PCI), a legal designation that allows for fast-tracked permits and access to the EU’s Connecting Europe funding facility.

The proposed pipeline, managed by state company Melita TransGas, would link Malta to Sicily. It has been on the PCI list since 2013, with renewals in 2023, 2025, and again on Friday keeping hopes for a hydrogen-ready pipeline alive.

The Council’s position will now move to tripartite negotiations with the European Commission and the European Parliament.

While the pipeline was originally designed for liquefied natural gas (LNG), Malta adjusted the plan in 2020 to make it "hydrogen-ready" to align with EU green goals.

If built, the pipeline would supply LNG to Malta, allowing the country to phase out the offshore LNG tanker currently stationed at Delimara.

Despite its perceived benefits, the project has faced a decade of resistance, with the European Commission repeatedly labeling Malta’s funding applications unjustified. Additionally, fossil-fuel infrastructure has grown increasingly unpopular among EU policymakers wary of delaying green energy transitions.

Malta's bid is also complicated by European Parliament scrutiny over criminal charges faced by a shareholder in the consortium operating Malta's Delimara power station.

Despite these hurdles, Energy Minister Miriam Dalli welcomed the decision, stating it preserves Malta's future access to the developing European hydrogen market.

In a statement, Dalli’s ministry said EU delegations acknowledged the unique challenges of isolated island states, while noting that such pipelines must not delay broader economic decarbonization.

During the same meeting, ministers also adopted a general approach to accelerate renewable energy permits and discussed post-2030 energy objectives amidst Middle East geopolitical tensions.