Representatives of the consortium said they planned to invest USD 220 million in the next five years when they expect the domestic market to meet all oil demand. Albpetrol was sold for Euro 850 mln
TIRANA, Oct. 8 – Albanian oil tycoon Rezart Taci is the owner of the majority 51 percent stake in the U.S based Vetro Silk Road Equity consortium which has been announced as the winner of an international tender to buy Albpetrol’s above-ground assets and the right to explore and exploit oil and gas in Albanian territory for 25 years.
Taci, 41, is already the owner of Armo oil refiner which he acquired back in 2008 for Euro 128 million, the biggest chain of retail petrol stations (Taci Oil), and most recently Albanian Screen TV. In a news conference on the consortium’s investment plans, Rezart Taci introduced himself as the owner of Singapore-based YPO Holdings which will have the majority 51 percent stake in Albpetrol oil firm. U.S based Silkroad Equity will have a 49 percent stake.
“In this project our group completes its cycle of business or is vertically integrated which means it extracts, refines and sells to the final consumer. Under this integration, Albanian consumers will get an Albanian product at a low cost. Secondly, Albanian workers benefit because of the refining in the domestic oil industry, which is a national treasury, and will bring extra revenues for them. Thirdly, the Albanian economy will benefit through the creation of opportunities for the support industry and the increase in tax revenues coming from the domestic processing of crude oil. This will reduce Albania’s deficit, increase safety and independence in energy,” said Rezart Taci.
Mathew Roszak, the President of the Vetro Energy said Albpetrol was planning to extend its activity in Southeast Europe, making Albania a regional energy hub.
“We presented a very compelling offer and promise to work hard to realize the full potential of Albpetrol. Some of our key considerations in pursuing Albpetrol include Albania’s stable political system. Albania is a member of NATO, it is strategically located for oil and gas flows. Albpetrol will further expand in Eastern Europe and the Balkans establishing Albania as a regional energy hub,” said Mathew Roszak.
“Taci’s achievements are great and we are proud to be partners in this enterprise. We would not have been part of this tender without Taci oil,” added Roszak.
Representatives of the consortium said they planned to invest USD 220 million in the next five years when they expect the domestic market to meet all oil demand.
The consortium’s investment plan includes the gradual growth in oil production through the reactivation of 1,048 inactive oil wells and the application of modern oil extracting techniques.
Based in Tirana, the Taci Group of companies employ over 2700 people and are continuing to expand, bringing growth and market efficiencies throughout the region.
Last week, the US-based consortium Vetro Silk Road Equity was given the okay by government to start negotiating the Albpetrol contract after an evaluation committee rated its bid first with 97.7 points. The winning bidder who has already deposited 10 percent of the bid as financial guarantee will need to place another 20 percent guarantee before starting contract negotiations, which means a total of Euro 255 million which goes to the Albanian government even if talks fail. The Euro 850 million payment to the Albanian government will be made in a single instalment after the negotiation of the contract.
In a tender held on Sept.7 U.S-based Vetro Silk Road Equity consortium outbid Canadian, Russian and Chinese potential buyers by offering 850 million euros, more than double the amount the Albanian government had been advised by its U.S based consultant Patton Boggs.
Only six bids were submitted in the Sept. 7 tender from an estimated 19 companies who had expressed interest to take over Albpetrol.
Albpetrol currently runs only 5 percent of the oil wells, some 1,200, while the remaining overwhelming majority is managed by foreign companies on concession contracts. Ahead of its privatization, Albania’s Energy Regulatory Entity (ERE) had granted oil producer Albpetrol licences to transmit and distribute natural gas in an effort to increase interest from potential bidders and raise the company’s market value. ERE has also equipped Albpetrol as a qualified wholesale supplier of energy. The state owned giant has also been granted several exclusive oil exploration rights.
The performance of Albpetrol’s privatization and that of four small and medium sized hydropower plants will also be decisive on the expected budget cuts as government revenues continue underperforming and some of the key contributors to Albania’s growth such as domestic consumption and exports remain sluggish making the reviewed 3 percent growth target impossible to meet. The crisis in key trade partners Italy and Greece where more than 1 million Albanian migrants live and work is also further aggravating matters.
At 850 million euros, Albpetrol’s privatization would be the most successful Albania has made in the past 20 years.
Experts suggest that government revenue from Albpetrol’s privatization should go to public investments and the reduction of the public debt, currently at the legal ceiling of 60 percent of the GDP.
