{"id":26636,"date":"2026-06-21T10:05:25","date_gmt":"2026-06-21T08:05:25","guid":{"rendered":"https:\/\/altax.al\/?p=26636"},"modified":"2026-06-21T10:06:51","modified_gmt":"2026-06-21T08:06:51","slug":"extractive-industry-great-wealth-but-limited-profitability-and-a-narrow-window-of-reform","status":"publish","type":"post","link":"https:\/\/altax.al\/en\/extractive-industry-great-wealth-but-limited-profitability-and-a-narrow-window-of-reform\/","title":{"rendered":"Extractive industry: great wealth, but limited profitability and a narrow window of reform"},"content":{"rendered":"\n

According to the ALTAX Observatory study<\/a><\/strong> (Alb), Albania has generated a considerable volume of revenue from its underground resources during the 2010\u20132025 period, but the analysis of the extractive sector reveals a profound contradiction between its economic potential and the actual value realized. While direct revenues amount to approximately USD 15.8 billion, estimates of opportunity losses range from USD 16 billion to USD 47 billion, as a result of a limited fiscal structure, the lack of domestic processing, and institutional weaknesses in the management of extractive rents.<\/p>\n\n\n\n

Declining Production and the Absence of Savings Mechanisms<\/em><\/p>\n\n\n\n

The oil sector, once the main pillar of the extractive industry, has entered a clear downward trajectory. Production has declined by approximately 46% from 2016 to 2024, falling from 24,000 to 13,000 barrels per day. The remaining reserves, estimated at around 150 million barrels, risk being depleted between 2035 and 2040 in the absence of new investments and, more importantly, without a sovereign wealth fund to cushion this depletion.<\/p>\n\n\n\n

By comparison, countries such as Norway have built strong savings and investment mechanisms through sovereign wealth funds, avoiding the classic effects of the \u201cDutch disease.\u201d<\/p>\n\n\n\n

Negative Impact on Productivity and Economic Structure<\/em><\/p>\n\n\n\n

The analysis of Total Factor Productivity (TFP) shows a negative effect of \u22122.51%, confirming that the extractive sector has not acted as a driver of diversification but rather as a factor that has distorted the allocation of economic resources.<\/p>\n\n\n\n

This pattern resembles cases of countries that have experienced phases of \u201cnatural resource dependence,\u201d where short-term growth does not translate into sustainable development.<\/p>\n\n\n\n

An Incomplete Value Chain and a Fragmented Economy<\/em><\/p>\n\n\n\n

One of the deepest structural problems is the lack of domestic processing. Minerals such as chromium and oil are exported mainly as raw materials, leaving outside the Albanian economy the added value created during the processing stages.<\/p>\n\n\n\n

If only 30% of mineral production were processed domestically, the economy could generate an additional USD 800 million to USD 1.2 billion per year. Currently, the economic multiplier effect remains around 1.2\u00d7, whereas in integrated economies it reaches 2.5\u20133\u00d7.<\/p>\n\n\n\n

This \u201cenclave economy\u201d model is typical of economies where the extractive sector is not linked to domestic industry.<\/p>\n\n\n\n

Accumulated Environmental Costs and Hidden Liabilities<\/em><\/p>\n\n\n\n

Another critical dimension is the environmental legacy. More than 5,000 abandoned oil wells constitute a major economic and ecological liability. The cost of rehabilitation is currently estimated at USD 150\u2013300 million, but if action is delayed, it could rise to USD 400\u2013500 million by 2035\u20132040.<\/p>\n\n\n\n

This is a typical example of the \u201ccost of inaction,\u201d where postponing decisions exponentially increases the fiscal burden.<\/p>\n\n\n\n

Reform Potential: Three Transformational Pillars<\/em><\/p>\n\n\n\n

The analysis suggests that there are three key interventions that could alter the economic trajectory:<\/p>\n\n\n\n