ARMO Goes To America

TIRANA, May 21 – A U.S.-Swiss consortium on Wednesday offered the best bid in an international tender for the sale of an 85 percent stake in the state-owned ARMO (Albanian Refinery &. Marketing of Oil) oil company.
Some 25 international companies responded to the tender launched in three world media outlets in February, but only four- British Petrofac Energy Development International Limited, U.S.-Swiss Refinery Associates of Texas & Anika Enterprises Consortium, Czech Penta Investment Limited registered as an investment fund in Cyprus and Vitol US Ballkan Fund & Euroil sha- presented their bids, the Ministry of Economy, Trade and Energy said in a statement.
The U.S.-Swiss consortium gave the best bid with 125 million Euros. It offered not only to buy ARMO with the highest bid but also offered to invest 240.5 million euro to modernise the aging ARMO facilities.
“The offer by the American company was considerably better than the three others selected to bid out of 25 who had expressed an interest in buying ARMO”, the statement said.
Albanian Deputy Finance Minister, Sherefedin Shehu declared, “We are extremely pleased. We were not expecting that the bids could arrive to these numbers”. Moreover, the Final Refinery announced through its spokesperson that it shall not sack people, but it is going to hire new workers, because there quite a lot to do.
The bids for ARMO will be evaluated using a formula of 75 percent on the price offered and 25 percent on the prospective buyer’s business and development plan.
The business and development plan presented by Refinery Associates of Texas is not evaluated yet. However, there is very little doubt that Refinery is the winner of the international tender.
“The price was the most important thing”, said Albanian Deputy Economy Minister Neritan Alibali.
Refinery Associates of Texas is a New Braunfels, Texas-based company. It is a petroleum products trading company that works with refiners to procure shipments of fuel. Refinery Associates of Texas is headed by President and CEO Joe Desormeaux, 58, who served in the U.S. Army from 1965 to 1967, worked for Amerada Hess Corp. of New York. He joined with Refinery Associates in 1978 and now owns 100% of the company. Refinery Associates is solely a petroleum products trading company that employs five people and has annual sales of $120 million. Other Directors include R.G. Wills Jr., who was employed with Amerada Hess Corp. from 1958 to 1981. Refinery Associates of Texas is one of the largest suppliers of oil, diesel, jet fuel, etc for the US armed forces. The company is the supplier of jet fuel for the Air Force One.
Petrofac bid to buy ARMO for 30 million Euros and to invest 66 million Euro in modernising ARMO. Penta Investments presented the lowest bid, only 10 million Euros and committed to invest 198 million Euro in ARMO. The independent trader offered to buy ARMO for 100 million Euro.
ARMO runs two refineries, a large one in Ballshi, 40 km from the sea, with an annual processing capacity of 1.5 million metric tons of crude oil, and a smaller one in Fieri, plus a small network of filling stations selling motor oil and products. The Albanian refinery complex in Ballshi was built in mid 70′. It has the monopoly of supplying the Albanian market and in its best years processed around 700,000 metric tons of crude oil. During the period 1996-1998, the market share of ARMO shrank to 30 percent of the Albanian market. In the last years, ARMO has been plagued by problems related to old technology and poor management. ARMO controls only 25 percent of the Albanian market. Authorities split ARMO from the tottering, oil-producing branch of Albpetrol before the sale to make the refiner more attractive.
The winning bid would be declared within a month, the ministry said. Then the contract is expected to be signed in June and it should also be approved by the Albanian parliament.