The six-legged dog "runs" in Montenegro

The six-legged dog "runs" in Montenegro

Editorial Staff
Through the signing of a Concession Agreement for the exploration of 4 offshore blocks, Eni, together with Novatek, is officially entering the upstream sector of the Balkan country, which since 1999 has embarked on the path of market economy and has made energy one of the leading sectors of future growth

A small country with a great history of pride and determination behind it. Montenegro, where Eni recently signed a Concession Agreement relating to the exploration of 4 of the country’s offshore blocks, has been formally independent since June 3, 2006, namely since its population sealed the deal to break away from the federation with Serbia following a referendum. Currently, as evidenced by the entry of Eni which, according to the agreement signed with the Government in Podgorica, will take on the role of Operator, and a 50% share (the partner in the joint venture is Novatek, holding the remaining 50%) in the exploration licenses of the 4 blocks covering a total surface area of 1,228 km2, the country is committed to supporting an economic growth plan that sees energy as a strategic sector. To demonstrate this desire, in 2014 a comprehensive plan for the development of the energy sector with the emblematic title “Energy Development Strategy by 2030” was passed by the Montenegrin Government. The policy document considers all subsectors and the primary sources of energy, and involves the construction of new energy infrastructure such as Block II of the Pljevlja Thermal Power Plant, new hydroelectric power plants on the Morača and Komarnica rivers, an underwater cable to transport energy between Montenegro and Italy, an Adriatic-Ionian pipeline, and numerous wind farms and hydroelectric power plants.

Large investments in energy

By 2030, the energy development strategy in Montenegro plans for investments in the industry amounting to over €4 billion

By 2021, the same strategy plans for investments in the energy industry amounting to over €3 billion, while investments for the period 2022-2030 are expected to amount to around €1.1 billion. For Montenegro this means a financial commitment amounting to approximately €300 million every year in the energy industry, corresponding to almost 10% of the country’s GDP. The "Energy Development Strategy by 2030" also plans for the creation of an agency aimed at managed the storage of petroleum products and a detailed plan to ensure the supplies of oil products and derivatives. The Government has also made the decision to establish the Administration for Hydrocarbons and to allocate initial operating funds to the Montenegro budget for 2015 for its operation. On the other hand, Eni’s entry into the Montenegrin upstream sector is part of the company’s strategy aimed at strengthening its exploration portfolio in an area in which the company has always led the way, since the early 1960s, in Exploration & Production activities. The 4 licenses were granted under the First International Competitive Bid Round.

Eni's entry into Montenegro's upstream sector is part of the company's strategy to strengthen its exploration portfolio in an area in which the company has always led the way

An economy in transition

1999 can be identified as the year that saw the start of the transition process of Montenegro’s economy towards a market system. This process saw the application of a massive privatization process, which in 2015 recorded 85% of state-owned companies passed into private hands, including 100% of the banking, telecommunications and oil distribution network industries. The Government has now acknowledged and pursued the aim to remove obstacles in order to remain competitive and to open up the economy to foreign investors. To date, Montenegro’s main trading partners are Italy, Norway, Austria, Russia, Hungary and the United Kingdom. Net direct foreign investments in 2014 reached €483 million: one of the highest per capita investments in Europe.