Italians and Russians searching for oil and gas – Legislative Committee of Montenegro authorizes agreements on concessions for undersea search near Ulcinj

Illustration (Photo: Dabarti CGI/shutterstock.com)

The Government of Montenegro authorized the concession agreements with the Italian-Romanian consortium Eni and Novatek in February, which should, in the first phase, search the undersea for oil and gas.

The acting director of the Hydrocarbon Administration Vladan Dubljevic stated that he expected that the agreements would be ratified in the Parliament.

- The two companies will be jointly searching for oil and gas in the undersea for the next seven days and, if they find commercially viable amounts, they will be able to produce hydrocarbon products for 30 to 40 years. The law prescribes that the state shall receive 54% of the production profit, which is why the bidding prices in tenders are not crucial. The question of the oil fund to which significant portions of the state's income will be paid shall be regulated by a lex specialis – states Dubljevic.

The MANS (The Network for Affirmation of the NGO Sector), however, considers a few provisions of the agreements to be problematic, because they, as the MANS claims, favor oil companies at the expense of the public interest.

- Especially indicative is the stipulation defining the force majeure events, which, in addition to the usual listing of natural phenomena and disasters, wars, border hostilities, blockades, citizens' unrest and workers' strikes, also lists “illegal state actions”. This stipulation doesn't protect the public interest well enough and leaves room for the oil companies to liberally interpret the stipulation in case of legal procedures. The Government has added to the final version of the concession agreement the note that “international sanctions applied against Montenegro or by Montenegro” may also be understood as a force majeure.

This part of the agreement was absent from its initial design, and, considering that one of the signing parties is Novatek, it becomes clear that the Russian company will in practice be precluded from realizing the agreement as long as the recent sanctions applied by Montenegro against Russia are in force.

Twenty boreholes

The undersea search will encompass 13 Ulcinj blocks of up to 3,000 square kilometers of surface. The surface available for search in Montenegro is 21,500 square kilometers, of which 13,000 on land, the rest at sea. Of the totality of 20 boreholes, as much as 16 were installed between 1949 and 1966.