CAIRN Energy is to ramp up the hunt for oil and gas in the tourist playground of the Mediterranean after being awarded three exploration blocks off Malta.

Edinburgh-based Cairn has been granted licences covering a huge swathe of under-explored frontier territory north of the island state, which is visited by legions of British holidaymakers every year.

The granting of the awards could stoke controversy about Cairn Energy's activity in areas of environmental sensitivity.

Cairn has been criticised by environmental campaigners for its work off Greenland, where the company has drilled eight wells without making a commercial find. However, Cairn said it strongly believes it is possible to explore for energy resources both sustainably and safely in Greenland.

Yesterday, a spokesman for the company said: "Cairn has a successful track record in frontier exploration and has demonstrated the ability to develop and manage complex exploration and drilling projects successfully, whilst minimising its impact on local communities and the environment."

The company is in the early stages of exploring in Spanish waters in the western Mediterranean, where it was awarded five blocks last year.

The move into Malta forms part of a plan to build a balanced portfolio of assets developed by Simon Thomson since succeeding Sir Bill Gammell as chief executive in July last year.

Sir Bill, who was chief executive when Cairn made a series of bumper finds in Rajasthan state in India, became chairman.

The company said yesterday Sir Bill's wife Lady Janice had sold shares worth £1.45 million. Trusts in which Sir Bill has an interest sold shares worth £260,000.

Mr Thomson aims to balance frontier exploration like Cairn did in Rajasthan with less risky activity in areas such as the North Sea.

He has noted the Mediterranean and North Africa contain relatively underexplored areas in which Cairn sees potential to make big finds.

In August, Cairn bought stakes in three deep water blocks off Morrocco. It has bid for licences off Cyprus and is considering applying for acreage off Lebanon.

The Mediterranean has had attention from big names.

In August Genel Energy, run by former BP chief executive Tony Haywood, acquired interests in blocks off southern Malta from Mediterranean Oil & Gas.

America's Noble Energy has made some big finds in the Eastern Mediterranean in recent years.

Cairn Energy made a low key announcement about the Maltese awards, in which it confirmed the company entered into an Exploration Study Agreement on December 7 with the Government of Malta.

The agreement covers the kind of early stage work that oil and gas companies would complete with a view to identifying areas in which it might be worth drilling.

Cairn said: "The ESA covers an initial two-year period with geological studies, reprocessing of existing and acquisition of new 2D seismic data and limited capital works, with the right to negotiate a production sharing contract on an exclusive basis thereafter.

"The agreement can be extended to a third year in order to acquire 3D seismic."

The Maltese Government said the work programme consists mainly of the reprocessing of existing 2D seismic data and the acquisition and processing of a minimum of 1500km of new 2D seismic. It also includes mapping of key horizons over the area covered by the available data. It said Cairn would pay a signature bonus of $100,000 and spend at least $2.5m on exploration within the term of the agreement.

Separately, Cairn Energy said: "On 1December 12, Lady Janice Gammell ... sold 551,909 ordinary shares of 231/169 each in the company at a price of £2.6326 per share.

"Two trusts in which Sir Bill Gammell has a beneficial interest also sold a total of 98,764 ordinary shares at £2.6326 per share on December 12."

Sir Bill retains 596,331 shares in the company worth £1.6m at yesterday's closing price of 260.9p per share.

He has 421,800 shares outstanding under the 2009 Long Term Incentive Programme.