Albania’s oil reserves attracting international companies

TIRANA, Nov 18 – Several oil companies are now scouting for space in Albania thanks to its large oil reserves. The tiny nation produces 350,000 tons of oil annually. The oil rush to Albania is driven by high oil prices, the need for energy security in Europe and a strategically desirable location close to leks European markets.
Large independents and major oil companies have been operating in the country for a number of years and the government has a clear policy to attract foreign investment in its natural resource sector. Petroleum was the first industry to attract direct foreign investments in Albania when the government successfully negotiated with foreign drilling and exploration firms for onshore and offshore prospecting. In the last 15 years, the country has licensed drilling to American, Austrian, Canadian, Croatian, Greek and Swedish companies.
Similar to the Production Sharing Agreement’s potential, Albania’s political and business prospects have dramatically improved as the country is becoming one of the most pro- business governments around. With a population of only 3.5 million, the financial and technical assistance from the EU is quickly having a dramatically positive effect. The country is being rebuilt with the help of billions of euros from the EU in conjunction with Stabilization and Association Agreement (SAA) between the EU and Albania. At the same time, the inflow of investment from Albanians abroad is estimated to exceed $1 billion annually, even though tendencies are that remittances will drop starting from 2009. As a further indication of its improved stability and prospects Albania joined NATO in 2008 and is currently undertaking key steps to become an EU member.
In addition to the greatly improved political and business environment Albania has a very favorable tax system for petroleum exploration and development. Royalties on oil production in Albania range from 10 percent to 15 percent while taxes on net profits are 45 percent.