Montenegro may be sitting on top of oil reserves

Jun 25, 2001 02:00 AM

Independence, corruption and politics have slipped off the agenda in Montenegro following news that the tiny republic may be sitting on top of huge oil reserves. Coffee shops, classrooms, lecture halls and businesses are buzzing with speculation the find could bring untold wealth to the republic's 650,000 citizens.
The phones at the Kotor-based Jugopetrol, the state-owned oil company, have been ringing incessantly since it was reported on June 3 that Ramco Oil CEO Stephen Remp was about to set off for Podgorica. In the late 1980s, Remp made one of the world's biggest ever oil finds off Azerbaijan -- over 4 bn barrels.
Ramco and Jugopetrol refuse to comment on the potential reserves in the Adriatic, but speculation is rife they could equal Remp's discoveries in the Caspian Sea. A nervous secretary at Jugopetrol would only say, "All the directors are at an important meeting with foreign guests".
Remp was due to meet Jugopetrol officials on June 5 to discuss where to begin drilling test bore holes early in 2002. Optimistic Montenegrins are now fantasising about living in one of the smallest, but richest countries in the world. Igor, owner of a busy Podgorica café said, "This is the dream of all Montenegrins -- to sit in coffee-shops all day, not doing anything, while money falls out of the skies. I'm sure it's going to be just like that."

Other more pessimistic observers believe the whole oil issue is little more than a Djukanovic propaganda ploy, part of his wider strategy to push through independence from Yugoslavia. The president did not do as well as expected in the recent parliamentary elections, which were dominated by the issue of secession. Some critics claim the "oil discoveries" are intended to add credence to the pro-independence lobby's case that the tiny republic can survive economically on its own.
For now, however, it does look as though the optimists might be right. In 1998, Montenegrin Jugopetrol and Ramco set up a joint oil research company. Ramco holds a 51 % stake and Jugopetrol 49 %.
The Montenegrin government then confirmed that the latest research pointed to the existence of a large oil basin. Vojin Djukanovic, minister of economy and energy said on June 4, "Oil has already been found in the [areas of the Adriatic] sea belonging to Albania and Croatia and we believe there are also reserves in our area because it is assumed this is part of the same basin. Latest research confirms this."

Ministry energy experts told they had been ordered not to discuss details and that everything would be made public at the appropriate time. Jugopetrol complained on June 5 that the media were "kicking up too much dust" over the issue, but management later acknowledged they had agreed with Ramco to begin installing the first drill in early 2002.
The next day Remp arrived in Podgorica for an official meeting with Djukanovic. A presidential statement issued after the meeting read, "Stephen Remp expressed readiness to increase investment and assured the president that he will find oil and gas".
Reactions from Serbia have been muted. Serbian energy expert Djordje Buric told that oil exploration in Montenegro was not realistic in the near future because of the lack of infrastructure and political instability -- which would put off foreign investors. But Buric did concede that oil and gas reserves probably did exist. "The question is how deep the oil is. If it is too deep the price could be too high for commercial use."

Stories of Montenegrin oil are not new. The first explorations began in 1951. Five major drilling sites were opened near the coastal town of Buljarice. The bore holes extended to 3,000 metres, but the search was halted for reasons that remain unclear. In 1990, exploration work was started in Crmnice, some 20 km from the coast, but was halted by the war and the imposition of sanctions against Yugoslavia. Sceptics point to these fruitless adventures as proof the idea of oil riches is pie in the sky.
It is also true that the oil news has come at an especially opportune moment for the Montenegrin president. Besides the election set-back and the international community's threat to pull economic support if Podgorica pushes ahead with secession, Djukanovic has also found himself at the centre of a Croatian media investigation into illegal tobacco shipments and organised crime. Unfortunately Montenegrins will have to wait at least a year and for the completion of preliminary drilling before they will know whether the dreams of oil wealth are to come true.

Source: Institute for War & Peace Reporting
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