TIRANA, Dec. 1 – Canada-based Bankers Petroleum has warned it could temporarily reduce its oil production if the Albanian government does not comply with a stop order issued by an arbitration court to unfreeze its Albanian bank accounts over a tax dispute.
Ten days after the ruling by the Paris-based ICC International Court of Arbitration, the Canada-based company which is the largest oil producer in Albania, says the Albanian government has not yet complied with the order issued by the tribunal which is preventing its activity.
“Bankers is now forced to consider a phasedown of its Albanian operations since lack of access to the bank accounts will begin to restrict its ability to pay local contractors, import goods and export oil,” the company said in a statement.
While the Albanian government is expected to comply with the stop order in order to continue its participation in the ICC Tribunal process, the conflict has already escalated.
National oil producer, Albpetrol, which also supervises concession deals with private oil exploration and production companies, has already selected prestigious U.S.-based Curtis, Mallet-Prevost, Colt & Mosle LLP in the arbitration case with Bankers over the $57 million tax dispute.
The selection of the law firm reduces chances of an out-of-court deal after the Albanian government and Bankers agreed last September to hire an international audit firm to settle a dispute over $57 million in claimed taxes by the country’s National Agency for Natural Resources.
Bankers Petroleum says it has invested $1.4 billion during its 11 years of operations in Albania, becoming the largest foreign investor and employing over 1,500 people.
In the midst of tax dispute with Albanian authorities, the Canada-based company announced last week it has diversified its investments to Hungary by acquiring an oil exploration block where it plans to invest a total of €12.3 million over a three and a half year contractual term.
Bankers Petroleum has been struggling with modest profits during this year from its operations in Albania as international oil prices stand at a record low. The country’s biggest foreign investor and exporter reported a net income of U.S.$4.77 million in the first three quarter of this year, down 94 percent compared to the same period last year when international oil prices hit a record high.
Eleven years after launching its operations in the Patos-Marinze heavy oilfield under a 25-year concession deal with the Albanian government, Bankers Petroleum has not started paying profit tax yet, which under Albanian law companies operating in the oil industry pay at a 50 percent rate only after meeting their investment costs.
Back in April 2015, Bankers Petroleum came under fire after an incident involving the explosion of two oil wells forcing the evacuation of some sixty local households. The Albanian authorities also questioned if the country’s largest foreign investor and exporter has paid all its taxes.
