The Hydrocarbons Administration is preparing the necessary documentation for announcing a new public call for awarding concession contracts for oil and gas exploration in Montenegro.
First, as stated in the Administration’s work report, a simple public procurement for consulting services in legal advice during the preparation and execution of the public call will be announced.
“The public procurement plan is in the verification phase, after which the initiation of this procedure and ultimately the announcement of the public call for exploration is expected,” the report states.
The document notes that hydrocarbon exploration is recognized as an activity of exceptional importance for Montenegro. The discovery of hydrocarbons in the seabed could lead to the development of a new industry, with economic benefits that would raise the standard of living and promote economic growth in the country.
According to the Law on Hydrocarbon Exploration and Production, there are two types of concession contracts: one for exploration and one for production.
A concession contract for hydrocarbon production grants concessionaires the right to conduct exploration and production, as seen with current concessionaires Eni/Novatek and Energean.
A concession contract for hydrocarbon exploration grants the concessionaire the right to conduct geological and geophysical research without the right to drill exploratory wells or produce hydrocarbons.
“The aim of publishing the public call and concluding a concession contract for hydrocarbon exploration is to increase knowledge about Montenegro’s seabed hydrocarbon potential, with the goal of discovering commercial oil and gas reserves,” the report states.
By realizing the concession contract for exploration, Montenegro will obtain new geophysical data for parts of the seabed not currently covered by production concession contracts and that remain unexplored.
“This would result in the successful awarding of new concession contracts for hydrocarbon production, similar to the contracts with Eni-Novatek and Energean, potentially leading to the discovery of commercial oil and gas reserves,” the report adds.
The concession contract for exploration grants the concessionaire the right, at its own expense and risk, to acquire, process, reprocess, interpret, market, and sell seismic and other data obtained during the contract’s execution.
“The data obtained during the realization of the concession contract are the property of Montenegro, while the concessionaire has the right to sell this data to interested oil companies and third parties at agreed prices, with the revenue from sales shared between the concessionaire and the state of Montenegro,” it is explained.
Additionally, given the ongoing oil and gas production onshore in Albania and planned hydrocarbon exploration in Republika Srpska, there is industry interest in exploring Montenegro’s onshore areas.
“Before starting specific actions related to new activities for hydrocarbon exploration and production in Montenegro’s seabed and onshore, the Hydrocarbons Administration is actively working on verifying the compliance of potential projects with new public policies, energy development directions, and environmental protection in Montenegro and the EU,” the document concludes.
In 2016, Montenegro signed a concession contract for hydrocarbon production with the consortium of companies Eni and Novatek for blocks 4118-4; 4118-5; 4118-9; 4118-10, covering a total area of 1,228 km². This contract expired on September 13, 2022.
The consortium paid 12 million EUR into the state budget in 2022 under a guarantee for the unfinished part of the work defined by the contract for oil exploration in Montenegro’s seabed due to their withdrawal from further exploration.
A concession contract for hydrocarbon production in Montenegro’s seabed was also signed in 2017 with Energean for blocks 4219-26 and 4218-30, covering a total area of 338 km². This contract expired on July 15, 2022.
