Analysts predict that over the next 30 years BiH oil production would be able to sustain the region independently as well as boost its troubled economy.
By Ana Lovaković for Southeast European Times in Sarajevo -- 30/08/12
Analysts say that tapping into BIH's oil could bring an extraordinary boost to the economy. [Reuters]
Research suggests that Bosnia and Herzegovina (BiH), with southern Montenegro and northern Albania, are the most promising oil prospects in the region between the Ural Mountains and the North Sea.
Last year, BiH and leading international oil company Shell Exploration & Production Company signed a memorandum of understanding governing the geological exploration of the 26,000km-long area.
The research phase of the project is scheduled to be completed by October and is based on documentation from research performed between 1970 and 1990 by US Amoco Corporation and Energoinvest from Sarajevo.
"It is still too early to say, but we are expecting the first oil and gas wells in the Federation in 2013," Federal Minister of Energy, Mining and Industry Erdal Trhulj told SETimes. "Exploitation could start in 2014."
"Having Shell as a partner in exploration is very important in helping the state image," Trhulj explained. "At this point we can't tell who is going to be our partner for exploitation."
He said that proposals on the table include Shell, Exxon and ICL, among others, all of which he considers to be "respectable" oil companies.
In Republika Srpska, Serbian-Russian owned oil company Jadran-Naftagas has begun geological research, performing seismic exploration in the northern region from Novi Grad to Doboj.
"All areas of Dinaridi have oil, especially Drežnica north of Mostar, from Posavina to Semberija and Majevica and dozens of other locations," Trhulj said. Drawing from the same geological field as Italy, "BiH, with southern Montenegro and northern Albania are the most promising oil and gas region from the Ural Mountains to the North Sea."
BiH oil prospecting first began in 1889 when Austrian geologists Katzer and Hofer explored the area of Majevica. Between the First and Second World Wars, oil was discovered, and about 300 tonnes were pumped from wells in Požarnica and near Tuzla, but due to low production and high cost of transport, as well as a lack of equipment and staff, production ceased in 1943.
Recently, the Zagreb-based company INA-Naftaplin realised after gaining exploration rights that the wells were still dripping oil and ripe with potential, with several deep wells in Tuzla, Vareš, and Glamoč.
The joint-venture effort to find oil and gas in BiH began in 1973, with Energoinvest and AMOCO exercising a 10-year right to explore the territories. The World Bank funded the project in northern Bosnia with a loan of $2.5 million (1.99 million euros), while the Dinaridi project was fully funded by AMOCO, which formed the AMOCO-Yugoslavia Petroleum Company in Zagreb to base their operations.
AMOCO's projections indicate a possible 350-million-barrel crude oil reserve in northern Bosnia. The commercial value will be confirmed after the first 4,000- to 8,000-metre wells are drilled, according to Trhulj.
Analysts say that tapping into BIH's oil could bring an extraordinary boost to the economy.
"I do not know whether or not these estimates are accurate," Banja Luka economist Damir Miljević told SETimes. "It could drastically change the economic situation in BiH if the exploitation is done for the benefit of the citizens."
He warned, however, that it could turn into "lost potential" if conflict and disagreement cannot be resolved between various entities or private Balkan moguls greedily attempt to line their own pockets.
"I think the damage has already been done," he explained. "RS gave a concession to the Russians, so part of the profit will end up in Russia and part in the pockets of those who have made these concessions."
The three countries in the region claiming the biggest oil production are Albania with 1.3 million tonnes per year, Turkey with 2.3 million, and Romania with 4.6 million.
In Albania, Bankers Petroleum and Stream Oil and Gas, both based in Canada, and state-owned Albpetrol are the three biggest oil production companies, reporting that they had reached a rate of between 1 to 1.2 million tonnes per year at the end of 2011. Analysts predict that Albanian oil production may reach 2.3 to 2.5 million tonnes per year by 2015.
In Turkey, national oil company Turkish Petroleum Corporation discovered rock structures containing an estimated 500 billion barrels of oil in the last decade. The corporation signed an agreement with Shell to conduct the drilling activities, which analysts say could transform Turkey into a major oil and gas exporter.
Romania produces some 4.6 million tonnes of oil per year and boasts oil reserves of 15 years, according to National Agency for Mineral Resources President Alexandru Patrauti. With 600 million barrels, Romania's reserves rank third in the EU and represent about 11 percent of EU stocks. The geological oil reserves are approximately 2 million tonnes and most of the production blocks are held by state owned national gas company Romgaz and OMV Petrom, the former Romanian state oil company.