Energy and Natural Resources

Energy and Natural Resources

Since classical times, people have exploited the fossil-fuel and mineral deposits present in the lands that now constitute Albania. Petroleum, natural gas, coal, and asphalt lie in the sedimentary rock formations of the country's southwestern regions. The predominantly igneous formations of the northern mountains yield chromite, ferronickel, copper, and cobalt. Albania also has deposits of phosphorite, bauxite, gold, silver, kaolin, clay, asbestos, magnesite, dolomite, and gypsum. Salt is abundant. About 70 percent of Albania's territory is about 300 meters above sea level, twice the average elevation of Europe. Jagged limestone peaks rise to over 2,700 meters. These great heights, combined with normally abundant highland rainfall, facilitate the production of hydroelectric power along rivers.

With its significant petroleum and natural-gas reserves, coal deposits, and hydroelectric-power capacity, Albania has the potential to produce enough energy for domestic consumption and export fuels and electric power. Mismanagement led to production shortfalls in the early 1990s, however, and forced the government to import both petroleum and electric power. For years after production dropped in the late 1970s, Albania's government considered statistics on the performance of its petroleum industry a state secret; as a consequence, data on the oil industry vary radically (see table 10, Appendix). Known petroleum reserves at existing Albanian drill sites totaled about 200 million tons, but in 1991 recoverable stocks amounted to only 25 million tons. Albania's petroleum reserves generally were located in the tertiary layers in southwestern Albania, mainly in the triangle-shaped region delimited by Vlorė, Berat, and Durrės. The principal petroleum reserves were in the valley of the lower Devoll; in the valley of the Gjanicė near Patos in the southwest, where they lay in sandy Middle or Upper Miocene layers; and in Marinėz, between Kuēovė and Fier. Petroleum was refined in Ballsh, near Berat; Cėrrik near Elbasan; and Kuēovė. The three refineries had a capacity of 2.5 million tons per year.

In the 1980s, the petroleum and bitumen enterprises employed 10 percent of Albania's industrial work force, controlled 25 percent of the country's industrial capital, and received almost 33 percent of its industrial investment funds. Nevertheless, the industry's share of the country's gross industrial production fell from 8.1 percent in 1980 to 6.6 percent in 1982 and perhaps as little as 5 percent in 1985. Albania only produced between 2.1 million tons and 1.5 million tons of petroleum annually in the 1970s, according to reliable estimates. Output sagged further during the 1980s when extraction became increasingly difficult. Albania's wells pumped only 1.2 million tons of petroleum in 1990. At some sites, obsolete drilling equipment was extracting only 12 percent of the available petroleum in situations where modern drilling and pumping equipment would permit the extraction of as much as 40 percent.

Petroleum was the first industry to attract direct foreign investment after the communist economic system broke down. In 1990 and 1991, the Albanian Petroleum and Gas Directorate entered into negotiations with foreign drilling and exploration firms for onshore and offshore prospecting. In March 1991, the Albanian government and a German company, Denimex, signed a US$500 million contract for seismological studies, well drilling, and production preparation. Albania also negotiated exploration contracts with Agip of Italy and Occidental Petroleum, Chevron, and Hamilton Oil of the United States.

Albania's known natural-gas reserves have been estimated at 22,400 million cubic meters and lie mainly in the Kuēovė and Patos areas. The country's wells pumped about 600,000 cubic meters of natural gas annually during the late 1980s. Fertilizer plants consumed about 40 percent of Albania's annual natural-gas production; power stations consumed about another 15 percent. Planners projected an increase in natural-gas production to about 1.1 million cubic meters per year by 1995, but output tumbled during the first quarter of 1991.

Albania's unprofitable coal mines produced about 2.1 million tons in 1987. The coal, mainly lignite with a low calorific value, was being mined mainly in central Albania near Valias, Manėz, and Krrabė; near Korēė at Mborje and Drenovė; in northern Tepelenė at Memaliaj; and in Alarup to the south of Lake Ohrid. Coal washeries were located at Valias and Memaliaj. Albania imported about 200,000 tons of coke per year from Poland for its metalworks. Conditions inside Albania's coal mines were deplorable, with much of the work done by manual labor. Albania used most of its coal to generate electric power.

About 80 percent of Albania's electric power came from a system of hydroelectric dams built after 1947 and driven by several rivers that normally carried abundant rainfall. Electric- power output was estimated by Albanian officials at 3,984,000 megawatt hours in 1988. Outfitted with French-built turbines, Albania's largest power station, the Koman hydroelectric plant on the Drin River, had a capacity of about 600 megawatts. The hydroelectric stations at Fierzė and Dejas, also on the Drin River, had capacities of 500 megawatts and 250 megawatts, respectively, and used Chinese-built turbines. Albania had no capacity to generate nuclear power, but in the early 1990s a research nuclear reactor was reportedly under construction with United Nations funds. In 1972 high-tension transmission lines linked Albania's power grid with Yugoslavia's distribution system. Albania's first 400-kilovolt high-tension line carried power from Elbasan over the mountains to Korēė, where a 220- kilovolt line carried it to Greece.

Droughts in the late 1980s and in 1990 brought an energy crisis and a sharp drop in earnings from electric-power exports. In 1991 heavy rainfall allowed Albania to resume electric-power exports to Yugoslavia and Greece. In the early 1990s, labor strikes and transformer burnouts--caused by the overloading of circuits when many Albanians turned to electricity to heat apartments after other fuel supplies ran out--regularly resulted in blackouts in towns across the country, and even sections of Tiranė, producing disruption months at a time. Although the electrical grid reached rural areas by 1970, the amount of power per household in farm areas was limited to 200 watts, only enough to power light bulbs. The chaos caused by economic collapse led to the destruction of about 25 percent of Albania's 30,000 kilometer power-distribution network.

Albania's mineral resources are located primarily in the mountainous northern half of the country. Albanian miners extract mainly chromium ore, ferronickel, copper, bitumen, and salt. Obsolete equipment and mining techniques have hampered Albania's attempts to capitalize on its mineral wealth. High extraction and smelting costs, as well as Albania's overall economic collapse, have forced mine and plant closures. The government repeatedly has promised to take steps to reopen mines.

Some production estimates placed Albania just behind South Africa and the former Soviet Union in the output of chromite, or chromium ore, which is vital to the production of stainless steel. Foreign studies estimated that Albania had more than 20 million tons of chromite reserves, located mainly near the towns of Korēė, Mat, Elbasan, and Kukės. Export of chrome and chromium products provided one of Albania's most important sources of hard-currency income. Albania's chromite industry, however, consistently failed to meet plan targets and came under severe criticism in the waning years of the communist regime. Estimates for chromite output during 1989 ranged from 500,000 to 900,000 tons. The drought-related power cuts in 1990 and economic chaos in 1991 forced the closing of ferrochrome enterprises at Burrel and Elbasan, and the government desperately sought sources of foreign capital to invest in technological improvements.

Albania's high-grade chromite reserves had been largely exhausted by the 1990. The poor quality of the remaining ore accounted for the country's worsening position in world markets. Impurities present in Albania's highest-grade chrome were largely the by-product of poor mining and smelting techniques and the use of antiquated Chinese equipment. The country's chromium industry also suffered because of inadequate transportation facilities. In the late 1980s, construction was under way on a rail link connecting the main chromium-ore production center at Bulqizė, in central Albania with the port of Durrės and the main line to Yugoslavia. In the late 1980s, Albania exported its chrome products mainly to Sweden, the United States, the Federal Republic of Germany (West Germany), Yugoslavia, and other East European countries. In 1980 Albanian chrome sales to the United States accounted for about 75 percent of the approximately US$20 million in trade between the two countries. Despite its reported profitability, the chromium industry suffered from a lack of worker incentive because miners frequently went unpaid. In 1991 one of Albania's top economists revealed that the country had never earned more than US$60 million a year from chrome exports.

Albania also produced copper, iron, and nickel. The main copper deposits, estimated at about 5 million tons, were located near the northern towns of Pukė, Kukės, and Shkodėr. During the 1980s, although the quality of copper ores was generally low, copper was the most successful industry in Albania's mineral- extraction sector. Copper production rose from about 11,500 metric tons in 1980 to 17,000 metric tons in 1988. The government aimed to export copper in a processed form and built smelters at Rubik, Kukės, and Laē. The industry's product mix included blister copper, copper wire, copper sulfate, and alloys. Albania's principal iron ore deposits, estimated at 20 million tons in the 1930s, were located near Pogradec, Kukės, Shkodėr, and Peshkopi. The Elbasan Steel Combine was Albania's largest industrial complex. In operation since 1966, the steelworks had obsolete Chinese equipment. Annual nickel output ranged from 7,200 to 9,000 tons in the 1980s.

Albanian bitumen and asphalt deposits were located near the town of Selenicė and in the Vjosė River valley. Bitumen and asphalt production rose significantly after World War II, and most of the output was used for paving and waterproofing materials and in the manufacturing of insulators and roofing shingles. Miners had worked the Selenicė deposits continuously for centuries before a lack of soap, boots, and basic equipment forced operations to cease when the centrally planned economy stalled. Geologists estimated that the Selenicė deposits would not be exhausted until several decades into the twenty-first century at normal production rates. Albania also possessed abundant deposits of salt, found near Kavajė and Vlorė. Limestone, a principal raw material for Albania's construction industry, was quarried throughout the country.


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