Balkan countries dream of oil riches

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Balkan nations have high hopes for an oil boom, which they say could provide a much-needed cash infusion and reduce the region’s reliance on imports.

Albania is reveling in the recent discovery of massive deposits in its territorial waters in the Adriatic Sea — a find that could net 1 billion barrels of oil. Serbia, meanwhile, is making plans to extract as much as 400m tonnes of oil shale from its territory, which could result in 600,000 tonnes of oil.

The announcements have some dreaming of new fortunes for the Balkan states, which have traditionally struggled with high unemployment and limited economic prospects.

“I would be very happy if Albania would come to be Balkans’ Kuwait,” Deputy Minister of Economy and Energy Enno Bozdo told SETimes. He noted that Albania is one of the few countries — in the region and in Europe — where huge oil and natural gas reserves have been discovered during the last century.

Albania’s discovery came when San Leon Energy, a Dublin based company, signed a contract with the government to provide offshore oil exploration and utilization last year. The company’s three-dimensional mapping suggested several large oil and gas prospects.

According to the standard contract that the government uses with foreign companies searching for oil on Albanian territory, the state earns 10% of gross production and 50% of earnings from oil sales, if the utilisation operations are successful.

A top expert on oil and gas in Albania, Professor Gjergji Foto of the Mining-Geology Faculty in Tirana, is optimistic about the prospects.

“We can say that all Albanian territory has bitumen, oil and natural gas apparition on the surface. During communism, we didn’t have the proper technology to detect sources. But now, around 400m tonnes of oil have been identified. This huge quantity is waiting for new technological investments. The government should help and be a partner with foreign companies, to have a common goal,” Foto, an engineer, told SETimes.

But the government has its detractors.

Mimi Kodheli, vice-chairman of parliament’s Economy and Finances Committee, told SETimes that the government should be more responsible for resources of strategic importance, like oil. “The legal framework leaves too much space for foreign investors. For example, they have the right to use sources up to 25 years.”

“The Albanian government is not transparent in drafting these deals and doesn’t publish procedures. It does not put underground wealth at public service, [rather] uses them for its own interests,” she added.

The opposition MP is also critical of government setbacks and bureaucracy that she says keep foreign investors away. “Nobody in Albania has the authority to enter into negotiations with an investor, if he hasn’t been at the prime minister’s office first. Not to mention other difficulties, like property issue or tax law that has been changed 64 times in the last few years,” Kodheli complained.

Bozdo disagreed, saying the government works to attract foreign investors to Albania, and to facilitate their conditions, regardless of the time needed to get environmental permission/license.

Drilling and oil extraction engineer Bashkim