Government approves concession contracts for hydrocarbons research in offshore of Montenegro

Podgorica, Montenegro (4 February 2016) -- At the session held earlier today, the Montenegrin Government approved the oil and gas research and exploitation concession contracts, which means that the preparatory process for hydrocarbons research in the off-shore of Montenegro has been completed. The contracts with the selected bidder, the consortium of Italian oil company Eni and Russian energy company Novatek, will be forwarded to the Parliament of Montenegro for adoption and the project's implementation is expected to start this year, Economy Minister Vladimir Kavarić told the press following the Cabinet meeting.

The consortium has pledged to drill three mandatory wells, one of which at the depth of 6,500 meters. The first phase of the project’s implementation will cost EUR 85 million, and the costs of the second one will amount to EUR 12 million. This is a contractual obligation supported by bank guarantees in the amount of 100% of the value of the work, Minister Kavarić explained.

“Before concluding the contracts, we will be given a EUR 85 million bank guarantee for the first part of the oil and gas research,” he pointed out.

The contracts shall be governed by and interpreted in accordance with the laws of Montenegro. The law prevails in case of conflict between the law and the contract, and in case of conflict between the Montenegrin and English version, the English version prevails, the Minister of Economy noted.

He added there are no stabilisation clauses, meaning that such reputable companies are entering the large-scale project on the basis of confidence in the Montenegrin business environment.

As to environmental protection, there is a set of regulations that need to be satisfied, and each procedure will involve assessment of the environmental impact.

The Government's financial participation in the project is not defined by the contract, but the Law on Hydrocarbons, Minister Kavarić concluded.