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Montenegro, Novatek will gradually withdrew from the hydrocarbon exploration project

03.Oct 2022.

According to Montenegrin media, the owner of Russian gas company Novatek Leonid Mikhelson said that the company will gradually withdrew from the hydrocarbon exploration project in the Montenegrin part of the Adriatic Sea.

Montenegrin Ministry of Capital Investments refused to comment the media reports. Russian company is a part of a consortium with Italian Eni, and if the consortium completely withdraws from the project, Montenegrin Government will have the right to activate the bank guarantee of 12 million euros. However, if Eni wants to remain in the project, it will have to find a new partner.

In May 2014, three consortia submitted bids in the tender for awarding the hydrocarbon exploration and production concessions in the Adriatic Sea. Tender referred to 13 concession blocks with overall area of 3,000 km2. The bids were submitted by the consortium of Marathon Oil Corporation (USA) and OMV (Austria), consortium of Eni (Italy) and Novatek (Russia) and consortium of Energean Oil & Gas (Greece) and Mediterranean Oil and Gas (England). In February 2016, the concession contract for oil and gas exploration for exploration blocks 4118-4, 4118-5, 4118-9 and 4118-10 in the Adriatic Sea has been signed with Italian-Russian consortium consisting of companies Eni and Novatek, which includes two exploration periods that last four plus three years, while the contract with Energean for two offshore blocks, 4219-26 and 4218-30, was signed in March 2017.

In early 2022, State Secretary at the Montenegrin Ministry of Capital Investments Marko Perunovic announced that the production of hydrocarbons at the perimeter awarded to a consortium of Italian Eni and Russian Novatek will not be feasible, because test drillings yielded no results. He said that concessionaires have completed test drillings and final reports has not been completed yet, but the Government was informed of a negative result and the well is now considered as a dry hole.

According to the concession agreement, following the completion of the first phase, Eni/Novatek was supposed to enter the second phase with the drilling of another, shallower gas well. However, it is not clear whether the concessionaire will proceed with drilling activities within the perimeter.