Institute for War and Peace Reporting | Giving Voice, Driving Change

Abkhazia Hopes for Oil Find

But some worry that offshore wells may harm tourism.
By Anaid Gogoryan
Abkhazian officials hope exploration by Russian petroleum firm Rosneft will help diversify the local economy, but there are fears oil discoveries might harm the environment and the tourism the territory relies on.



The government of Abkhazia, which broke free of Georgian control in a 1992-3 war and is recognised as independent by Russia, signed an agreement with Rosneft in December last year.



Under the deal, Rosneft, which is controlled by the Russian state, will spend five years exploring the waters off Abkhazia’s Black Sea coast.



Rosneft plans to drill two wells to assess the potential of the coastal waters off the town of Gudauta. The company’s preliminary assessments include only a 14 per cent chance of finding oil, however that – along with plans to build a chain of filling stations – was enough for President Sergei Bagapsh to hail the plan.



“The arrival of Rosneft in Abkhazia means serious investment and jobs,” he said, adding that the market for oil products would be diversified by the move.



“There will no longer be any monopolies, but instead there will be several companies working in this market.”



Investigations in the 1940s failed to find economically recoverable oil off Abkhazia, but all the littoral states of the Black Sea are currently looking for reserves under the sea bed.



Petr Kazanba, the head of Abkhazia’s department for geology and cartography, said there were different opinions on the volume of oil beneath Abkhazian waters. He said estimates ranged from 30 to 200 million tonnes.



“It is time to find out if there is oil in Abkhazia or not. The task is correct and timely. I am 100 per cent sure that this is safe and secure work,” he said.



Officials said that, before work could begin, experts would study the ecology of the region up to 30 or 40 kilometres from the shore and the drilling would be conducted to minimise the impact.



All the same, the project has provoked serious concern in the press and in society. The Social Chamber, a body set up by the state to group activists together, held a hearing on the matter and set up a special working group.



Natella Akaba, the secretary of the chamber, agrees that it was right for the government to examine all alternative methods of economic development.



“To restrict ourselves to tourism is to restrict our children and grandchildren,” she said.



But other activists were more outspoken, and feared an oil spill might harm Abkhazia’s major assets: its clean beaches, and calm atmosphere.



“You need to approach this question with great care,” Spartak Jidkov, a local expert, said.



“Since Abkhazia is in an unstable region, the security of oil production will depend on the military-political situation in the republic. Abkhazia is attractive to tourists because of its cheapness, but also because of the purity of its nature, which so far has hardly been harmed by technology.



“Any violation of the ecological situation would cause serious harm to the Abkhazian economy.”



His words were echoed by opposition politicians, including by Raul Khadjimba, the former vice-president and Bagapsh’s major opponent in presidential elections at the end of last year.



“I think it is not sensible to sign such projects without ecological and economic assessments, without accounting for public opinion. The hearings in the Social Chamber were nothing. There is the nation, there is parliament, and the leadership of the republic must discuss such projects with them,” he said.



He also said it was wrong for Rosneft to hold a controlling 51 per cent stake, while Abkhazia held a minority.



“This is not done anywhere in the world. If anyone thinks this situation can be changed in future, then he is badly mistaken,” Khadjimba said.



Another opposition figure, Akhra Bjania, head of the Akhiatsa organisation, expressed similar concerns, “Here I can see just our normal style of behaviour, which is like when your uncle says something is good for you. The state should be concerned with the future.”



But Vadim Ivantsov, general director of RN–Shelf Abkhazii, the Rosneft subsidiary operating in Abkhazia, said that if profitable quantities of oil were found, then the Abkhazian budget would receive 10 or 11 times more money than the company would.



“If the programme of 2010 is realised, then in value-added tax alone the Abkhazian budget will receive from 60 to 100 million roubles (2 to 3 million US dollars). That is before any tax on profits,” he said.



He said the company was taking significant risks in looking for oil, and had no guaranteed return on its investment.



Anaid Gogoryan is a correspondent with Chegemskaya Pravda.