VZCZCXRO1034
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHTI #0186/01 0710622
ZNR UUUUU ZZH
P 110622Z MAR 08
FM AMEMBASSY TIRANA
TO RUEHC/SECSTATE WASHDC PRIORITY 6807
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 TIRANA 000186 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
DEPARTMENT FOR EUR/SCE (ERIN KOTHEIMER AND YOULIANA IVANOVA) 
 
PASS TO USAID/EE/EG FOR JAMSHID HEIDAIRAN, ROBERT ICHORD, ROBERT 
ARCHER AND MARK SCHLAGENHAUF 
 
PASS TO TREASURY FOR VIMAL ATUKORALA 
 
E.O. 12958:N/A 
TAGS: ECON ENRG EINV AL
SUBJECT: Oil Discovery in Albania Premature, But Still Promising 
 
¶1.  (U)  This cable contains sensitive business proprietary 
information.  Not for Internet distribution. 
 
¶2.  (SBU) SUMMARY: Recent speculation that newly discovered oil and 
gas deposits in Albania could lead to an energy bonanza is 
premature.  However, a Swiss-based oil exploration company, using 
seismic data previously collected by Western oil firms and analyzed 
by a U.S. energy consultant, believes there are strong indications 
that significant reserves of commercially exploitable lighter grade 
crude oil and natural gas exist in north-central Albania.  The 
company will drill an exploratory well later this summer.  END 
SUMMARY. 
 
¶3.  (SBU) On January 10, Manas Petroleum Corporation, a small 
Swiss-based oil exploration and development company founded in 2004, 
issued a press release highlighting a resource evaluation report by 
Gustavson Associates, a Colorado-based energy consulting firm. 
Albanian media misreported a key finding of the report by stating 
that approximately three billion barrels in proven oil reserves had 
been discovered.  However, a subsequent meeting with Manas 
executives established that seismic data evaluated by Gustavson 
indicated only that there was the potential for undiscovered 
reserves of this magnitude.  Manas carefully hedged the report's 
conclusion by estimating there was a probability of between 5 to 25 
percent that they would find commercially exploitable oil and 
associated gas deposits in any one of eight different locations in 
the four concession blocks they were licensed to explore.  In its 
report, Gustavson also concluded that the concession contained up to 
15 trillion cubic feet of natural gas.  However, this calculation 
rises up to 28 trillion cubic meters if only gas is discovered. 
(Note: Albania currently has proven reserves of approximately 200 
million barrels of oil and 815 million cubic meters of natural 
gas.) 
 
¶4.  (SBU) Manas received a concession from the Albanian government 
in August 2007 to explore for oil and gas deposits in four large 
blocks comprising 780,000 acres in north-central Albania.  As part 
of its agreement with the GOA, Manas received 2D seismic data that 
was originally acquired by Shell Oil Corporation and the French oil 
firm Coparex in the mid 1990s.  Shell and Coparex pulled out of 
Albania in 1998 due to the upheaval that followed the collapse of 
the pyramid schemes and political instability in Kosovo.  (Note: The 
price collapse of oil to $10 a barrel in 1998 may also have played a 
role in the companies' decision to abandon exploration efforts in 
Albania's challenging mountainous terrain.) 
 
¶5.  (SBU) Econoff recently met with analysts from Gustavson and was 
given a copy of their report by Manas executives.  Gustavson's 
analysis of the seismic data, including approximately 4,000 
kilometers from the concession area produced in the 1990s in 
addition to another 700 kilometers processed by Manas, focuses on an 
area north of a high-sulfur, heavy oil producing area in south 
central Albania, the Marinza field near Fier.  Recent deep oil 
discoveries, including a 2005 light oil discovery by Occidental 
Petroleum approximately 50 kilometers south of the Manas blocks, 
indicate that deeper carbonate reservoirs contain 30 to 35 API low 
sulfur oil at depths below 3,000 to 3,500 meters. 
 
¶6.  (SBU) Shell and Coparex previously discovered a deep 
under-thrust geologic structure within the present Manas concession 
that, by their calculations, has the potential to contain a combined 
820 million barrels (MMBO) of recoverable oil.  The Gustavson report 
characterizes the Manas concession as possessing "superbly defined, 
giant, virtually drill ready prospects."  The report concludes that 
the previously acquired seismic results in a structurally favorable 
area, combined with Occidental's nearby light crude discovery, 
"substantially reduces the . . . blocks' exploration risk as it 
greatly increases the probability that (the concession) is in fact 
an oil-saturated formation" that could contain (1) oil with 
associated gas; (2) oil with gas cap, or; (3) gas with condensate. 
 
¶7.  (SBU) Manas plans to begin drilling an exploratory oil well by 
August at an estimated cost of $20 - 25 million.  No results are 
expected until the first or second quarter of next year.  Manas said 
its most optimistic scenario, predicated on an early discovery of 
commercially exploitable oil and/or gas reserves, would not start 
production before mid 2010. 
 
¶8.  (SBU) COMMENT: Despite the promising technical report regarding 
possible new oil and gas deposits in Albania, there is cause for 
concern whether Manas has the ability to develop its concession. 
Manas is a new, small oil exploration firm with a thin track record. 
 (Note: The company's only other oil exploration venture is in 
Kyrgystan, where the company has farmed out 70 percent of its 
 
TIRANA 00000186  002 OF 002 
 
 
interest in six licenses to another company to develop.)  Manas 
executives told Econoff they were having difficulty finding 
investors to develop their Albanian concession, despite record high 
prices for oil on world markets.  They specifically mentioned 
lingering suspicions regarding Albania's security situation as a 
detriment to attracting investment. 
 
¶9.  (SBU) COMMENT CONTINUED:  Manas approached the Embassy, and took 
the unusual step of sharing a sensitive resource report with us, to 
get Embassy support to convince the U.S. Trade and Development 
Agency to reconsider a prior refusal to fund a feasibility study on 
developing Manas' concession.  (Note: USTDA rarely funds feasibility 
studies for upstream energy development and said it was uninterested 
in making an exception for Manas given the availability of private 
investment in the current oil boom.)  Funding for the type of 
feasibility study sought by Manas would be about $500,000, small 
change in today's energy market.  In the end, Manas', and Albania's, 
oil bonanza dreams may be frustrated by a tired guest in the 
country's search for outside investment -- its poor, out-dated 
reputation as an unsafe destination for foreign investment. END 
COMMENT. 
 
WITHERS