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Eni-Novatek consortium begins offshore oil exploration in Montenegro

Italy’s oil and gas company Eni and Russia’s Novatek started exploratory drilling for oil in waters offshore Montenegro, informed the country’s Ministry of Capital Investments.

The Topaz Driller drilling rig arrived onsite in Montenegro in mid-March. Eni and Novatek will drill the first oil exploration well 26 kilometres from the coast with a planned depth of 6,525 metres. Drilling operations will last between four and a half to six months, depending on the results.

After that, the potential of the deposit will be defined, in order to make the most of its capacity and design a production method, which could come to life four to six years after the completion of the first well.

Montenegro signed a 30-year concession agreement with the Eni-Novatek consortium back in 2016 for the development of exploration blocks 4118-4, 4118-5, 4118-9 and 4118-10 with a total area of about 1,200 square kilometres located in Montenegrin territorial waters. Novatek and Eni each hold a 50 per cent stake in the concession.

Eni and Novatek completed 3D seismic surveys at the end of 2018 and the collected data was processed the following year. In early 2020, geomechanical testing of soil was completed to determine the properties of the seabed.

The Ministry of Capital Investments and the Hydrocarbon Administration both expressed their hopes that the exploration will contribute to the economic and environmental revival of Montenegro.

However, the drilling faced opposition from environmentalist groups who warned that Montenegro lacks resources to tackle the consequences and protect the environment in case of a major accident like an oil spill and called to cancel the concession. The Ministry of Capital Investments argued Montenegro would need to pay Eni and Novatek at least 35 million to 40 million euros if the project is called off. The Ministry stressed that first the reserves and the potential for exploration must be determined and that a public discussion can be held after that to reach a decision.

Montenegro also awarded Greek company Energean a 30-year oil and gas exploration licence in 2017 for the blocks covering a combined 338 square kilometres in the Adriatic Sea’s shallow waters.

Montenegro produces no oil but initial data has indicated that the country might become an exporter of crude oil if offshore exploration works yield positive results. The 2014 Montenegrin Energy Development Strategy estimates that, by 2030, up to 7 billion barrels of oil and 425 billion cubic metres of natural gas could be discovered along the coast. However, the report also underlined that further research regarding these resources is necessary to confirm the capacity levels adding that successful energy exploration must also factor in the environmental impact of operations, as coastal tourism comprises a significant percentage of national revenues.

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