In 1989, an American oil company Amoco won exclusive access to assess oil fields in Bosnia, joining them was a British consultancy, Exploration Consultants Limited (ECL), to conduct exploratory research. This resulted in an oil find in the north and south of the country. However, the 1990s war in Bosnia prevented the start of oil investment and drilling and this halt lasted nearly two decades.
The oil dispersed between two entities – the Federation of Bosnia and the Republic Srpska has seen its most promising find in Orasje in northern Bosnia, with 180 million barrels that are priced today at US$14 billion and rising. The ECL project lasted for two full years paid for by a $2.5 million loan from the World Bank, while Amoco funded the entire project from their own funds for which they managed to secure the exclusive contract with Bosnia’s firm Energoinvest.
With the latest weather crises in the U.S. and surrounding islands, oil traders went from expecting turbulent days ahead to oil sliding 3 percent on worries that energy demand would be hit hard. But if Bosnia plays its cards right, it could lay the ground for becoming Europe’s cradle of black gold. With this discovery in Bosnia, the country could enjoy cheaper oil prices and could export it to its neighbors.
A recent estimate by Australia’s Key Petroleum states that in the Federation entity, there are 600 million tonnes of oil reserves. As of Sept. 12, 2017, the price of unleaded petrol per liter in Bosnia amounted to €0.87, while in oil-rich Kuwait prices of merely €0.18 per liter were seen. Currently, Bosnia does not export oil, but in 2013, imports were estimated at 20,690 barrels per day. Bosnia’s GDP growth in 2016 exceeded 3 percent a year.
Since tests begun, 70 holes have shown positive results. The majority of fields rich in oil can be found in northern Bosnia at a depth of more than 600 meters. When the Americans tested in the Dinaric Alps (or Dinarides, a mountain range in south-western Balkans), they also found the presence of gas as well as oil. To drill one kilometer would cost one million KM (Convertible Mark Bosnia’s currency), so for Dinarides, it would cost 10 million KM, equivalent to about US$6 million.
Amoco, contracted by Energoinvest, took three years to complete the first phase of its prospecting work in the Dinarides region. Back in 1973, the Executive Council, the government of the Socialist Republic of Bosnia and Hercegovina granted Energoinvest a concession to start prospecting for oil throughout Bosnia. During the previous 10 years, from 1963-1973, Croatia's INA was the main concessionary and it conducted several extensive surveys especially in northern Bosnia.
Looking for oil in Bosnia goes back to the time of the Austro-Hungarian Empire when the first oil field was discovered in Mount Majevica near Tuzla and Brcko in 1898. In 2016, French oil giant Total expressed interest in oil and gas exploration in Bosnia and was ready to offer $1 billion for a contract. But Total was not the first company to express an interest in exploration in post-war Bosnia, it is the third company so far. Originally Shell Exploration entered talks but pulled out in September 2016 after Bosnia’s government changed the law on oil and gas exploration. In December 2015, Key Petroleum also expressed interest. Bosnia’s government planned to release a public call for expression of interest for oil and gas exploration in the Federation of Bosnia by the end of November 2016, but this was postponed. In May 2017, the Bosnian government was planning to appoint a body to carry out the search for consultants that would ultimately also end up with awarding the contract to the highest bidder for exploration of oil and gas in the Federation of Bosnia.
-Ionian Adriatic Pipeline
However, one way Bosnia’s energy is moving forward is through the Ionian Adriatic Pipeline (IAP) – a 516 kilometer-long gas pipeline running from Fier in Albania through to Montenegro, Bosnia to Split in Croatia. Azerbaijan’s company SOCAR built the project that is sponsored by the European Union.
In May 2017, Albania, Bosnia, Bulgaria, Croatia, Kosovo, Macedonia and Montenegro signed a joint deal to develop a natural gas pipeline that could stop their reliance on Russian gas. The project itself is backed by the U.S. development agency, USAID. The IAP would be bi-directional and would connect to the Trans Adriatic Pipeline, which will run from Greece via Albania and the Adriatic Sea to Italy and onto Western Europe. It is planned that the IAP will carry 5 billion cubic meters of natural gas per year.
In January 2009, Bosnia and its neighbors, who rely heavily on Russian gas, almost froze as the dispute between Russia and Ukraine over the price the latter should pay the former. At the time about 70 percent of Russian gas flowed through Ukrainian gas pipelines and onto Europe including Bosnia. But it is this exact monopoly Russia holds on gas and uses political means to control the Balkan countries that the EU and the USAID are seeking to stop, and it is with the IAP that they just might win the energy war with Russia.
But Bosnia is also capable and self-sufficient with 41 percent of all consumption deriving from renewables. The country generates 40 percent from hydropower and 60 percent from coal-fired power plants. In 2016, there was a 10 percent production increase in coal mines meaning a significant increase in its greenhouse gas emissions. To decrease greenhouse gas emissions, Bosnia’s arm of the Nordic Power Partners (NPP) will build a 48-megawatt (MW) wind farm in Mostar, in southern Bosnia and Herzegovina at a cost of $74 million, which will take three years to complete starting this summer. NPP is also planning to build another 48 MW in Podvelezje near Mostar as well as another 500 MW of wind power over the next few years. Bosnia is in a prime position because it is able to export power due to its hydro capacity. If it can also sign a deal with Total or another oil company, it could soon export oil too and with that, pay all its debts, rebuilt the country and provide much-needed jobs for its population of frustrated unemployed but well educated young people.
By Nadina Ronc in London
The writer is a London-based journalist and analyst who covers politics and economics in the U.K.
* Opinions expressed in this piece are the author's own and do not necessarily reflect Anadolu Agency's editorial policy.
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