TIRANA, Feb. 17 – A junior Canada-based oil company says it is on track to finalize a contract to explore an oil block in southern Albania in its first overseas expansion after emerging as a surprise winner in an international tender held in late 2015.
In a statement this week, Pennine Petroleum, currently engaged in minor operations in Canada, said it has signed the main terms and conditions of a production sharing agreement for the Velca Block, in southern Albania, with licensee Albpetrol, the national oil company of Albania.
“The finalization of the production sharing agreement with Albpetrol is expected to proceed to conclusion in the near future, now that the main terms have been established,” says John Garden, Pennine’s Chief Executive Officer.
The Velca block covers an area of 620 square kilometres and is located 10 kilometres southeast of the city of Vlore, a coastal city with a population of just over 100,000. The block contains 250 kilometres of 2-D seismic and two hydrocarbon indicative wells.
The Canada-based junior company which is currently active only in Canada’s Alberta and Saskatchewan has also recently hired Richard Wadsworth, a former executive of Canada-based Bankers Petroleum during its early years in Albania, in its board of directors.
The company’s total assets at the end of 2014 were estimated at only C$1 million while its shares at the Calgary-based TSX Venture Exchange are currently traded at only C$0.01.
Last August, Albania selected a joint venture between Canada-based Petromanas and the Royal Dutch Shell and a subsidiary of Israeli-based Delek Group as the winners of the first two onshore oil exploration blocks. Canada-based Petromanas and Shell Upstream Albania B.V, the Albanian subsidiary of the Royal Dutch Shell were announced winners to explore the onshore Block 4 in south-eastern Albania close to their current drilling site at Shpirag.
Meanwhile, Navitas Petroleum, a subsidiary of Israeli-based Delek Group was announced the winner of Dumre block in central Albania.
Albania has 13 free onshore and offshore oil and gas block which are scheduled for concession.
Foreign investors engaged in oil and gas exploration in Albania are exempted from the 20 percent VAT, can have their exploration stage extended from 5 to 7 years and engage in production from 25 to 30 years. Studies show Albania’s oil and gas reserves are estimated at 400 million tonnes, of which around 10 percent are easily extractable.
