Economics

Which Are The Biggest Industries In Albania?

Albania boasts Europe's largest onshore oil reserves as well as the second largest oil reserves in all of the Balkans.

Albania is an industrialized upper-middle-income nation, and it participates in NATO, OSCE, WTO, and BSEC. The industrial sector in Albania accounts for 14.9% of the GDP, with agriculture and services contributing 21.6% and 63.5% respectively. The strongest Albanian sectors are metallurgy, energy, tourism, agriculture, and textile. Albania boasts Europe's largest onshore oil reserves as well as the second largest oil reserves in all of the Balkans. The dissolution of communist rule in 1990 triggered the mass movement of refugees to Greece and Italy. Reform attempts took off in early 1992 thanks to a democratically chosen government, which after assuming power, implemented an economic reform program to place Albania on the way toward a market economy. A firm income policy and fiscal consolidation were some of the implemented reforms. Privatization was also done in earnest in transport, large state enterprises, small and medium-sized organizations, and services sector.

Oil and Gas

In 2013, Albania possessed over 100.2 million tons of crude output. Exploitation activities in the Kucova Oil field began in 1928 marking the beginning of oil exploitation in Albania. The exploitation activities were also implemented to regulate sandstone reservoirs in Patos after one year. Albania rigorously regulates this sector and it has lured global investors since the 1990s after economic reforms granted the private sector the rights to explore and exploit Albanian oil and gas. The reserves are however under the custody of the Albanian State. The nation's Patos-Marinza oilfield remains the most extensive onshore field in all of continental Europe. Affiliates of the Chinese Geo-Jade Petroleum bought the drilling rights to this field as well as those of Kucova from a Canadian firm in 2016. Companies with a presence in Albania's oil and gas sector include Transoil Group, TransAtlantic, and Sherwood International. Two refineries operate in Albania, namely Fier and Ballsh, with refining capacities of 0.5 million tons and one million tons respectively. Most of Albania's crude oil is exported.

Mining

Albania is blessed with such extractable minerals as coal, chromium, nickel, and copper. Albania ranks as the only European State with significant deposits of chromium. Albania's first geological map was compiled in 1922, and the Mining Law of the Kingdom was adopted in 1929 clearing the way for the exploration of the territory's minerals. From 1944 to 1994, mining was carried out by state-owned organizations. The industry has since witnessed far-reaching reforms since 1994. Over 700 mining permits have been allocated in Albania. The operation of some mines is being done under concession contracts including the copper mines of Karme and Lak Rosh and the chrome mines of Pojska, Bulqiza, and Katjel. Albania also has iron ore, bauxite, limestone, lignite and bitumen deposits. Albania's mining sector has lured in multiple foreign firms including the Canadian Tirex Resources. Albania's government has been encouraged to improve infrastructure to tap into the potential of the sector.

Textile and Clothing

The clothing industry ranked among Albania's strongest sectors until the 1990s. The sector managed the whole production chain and even produced a significant quantity of the raw material internally. The industry further satisfied more than 70% of the domestic demand. When state factories were privatized in the 1990s, the industry, together with the process of production, changed significantly. Albania does not produce raw materials anymore, although the factories manufacture clothing using ordered material which then heads to prominent brands in markets situated in western Europe. Albania's clothing and textile sector has been re-positioning itself to dilute the market share of imported products. The sector is advantaged by a highly skilled workforce as well as low wages. More and more local companies in Albania are moving away from the ‘cut make and trim' processes to providing complete package service to external consumers including those in France, Italy, Netherlands, and Germany. Such companies procure raw products mainly from Italy and Turkey. There are also more firms with the capability to produce finalized items that are items they have processed from the beginning to the end.

Hydropower

Albania is almost entirely reliant on hydropower for electricity production. Almost all of the nation's locally generated electricity is sourced from hydropower. Albania prides in eight main river systems. The Drin river ranks as the largest, and it is home to three hydropower stations namely Komani at 600 Megawatts, Fierzë at 500 Megawatts, and Vau I Dejës at 250 Megawatts. These three stations meet 90% of Albania's domestic electricity generation. Roughly 90 stations meet the rest 430 Megawatts of installed capacity. Albania was previously a net exporter of electricity although growing demand coupled with a low rate of new capacity installations has rendered it an importer of power. It is not uncommon for power shortages to occur in the course of prolonged droughts or dry periods. Experts assert that only 30 to 35% of the nation's hydropower has been tapped.

Environmental and social issues have deterred major projects. The Albanian government has resorted to building smaller hydropower stations especially those under 100 Megawatts capacity. Investments in renewable energy sources such as water are also exempt from customs duties that are subject to imported equipment and machinery. These attractive regulatory frameworks serve to lure private and foreign investors. Planned hydropower projects in the nation include the Devoll River cascade which will feature the hydropower stations Moglicë and Banja which is projected to open for commercial operations in 2018. Albania has also been looking to its neighbors for agreements to help develop its hydropower potential such as the 2014 deal signed with Kosovo to construct a 400-kV transmission line connecting their energy grids.

Tourism

Albania hosted about 4.2 million tourists in 2012 primarily from neighboring states and those in the EU. The tourist industry thrives along the Ionian and the Adriatic Sea coasts. The Ionian coast is sometimes referred to as the Albanian Riviera due to its pristine and beautiful beaches. The Albanian coast features varieties in coves, sandy beaches, lagoons, sea caves, capes, and covered bays. 70% of the nation's terrain is mountainous, and its forests, springs, peaks, and pastures create a pristine landscape. Tourism was responsible for 4.8% of the Albanian GDP in 2013, and this contribution is expected to rise.

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