TIRANA, Jan. 13 – With international oil prices at a 12-year low, the country’s largest oil producer, Canada-based Bankers Petroleum, says it has delayed its drilling activity and opted to resume as soon as pricing improves.
In a statement, the country’s biggest foreign investor which has been at loggerheads with the Albanian government over a tax dispute, said the two drilling rigs that were utilized throughout last year have been temporarily suspended as of late December 2015.
“Drilling activity will resume as pricing improves while the rigs have been racked in country and remain available to resume activity on short notice,” Bankers said.
The decision comes as international oil prices fell below $30 a barrel this week, hitting a 12-year low, as oversupply persists amid weak global demand.
Bankers Petroleum which operates the Patos-Marinza heavy oilfield cut the 2015 annual production to an average of 19,384 barrels of oil per day (bopd) compared to 20,690 bopd in 2014 when international oil prices hit a record high before coming on a downward trend in mid-year.
The Bankers decision is also expected to affect government revenue in lower revenue collected from royalty tax on oil sales, the overwhelming majority of which is destined for export.
Last December, the country’s largest foreign investor, announced a sharp cut in investments and oil production fueled by record low international oil prices and an ongoing tax dispute with the Albanian government. In its 2016 budget, Bankers Petroleum says it plans to invest $56 million in its Albania operations in 2016, down from a revised $153 million in 2015 and a record high of $291 million in 2014, hitting a record low since 2009.
In December 2015, Bankers Petroleum also reached a deal with the Albanian government over a $57 million tax dispute that will allow the country’s largest investor to regain control of its Albanian bank accounts and operate under normal conditions by paying the disputed amount in instalments while expecting the results of a third-party audit and a possible solution by Paris-based ICC International Court of Arbitration.
Bankers, whose shares at the Toronto Stock Exchange after the escalation of the conflict with the Albanian authorities lost 65 percent during the past couple of months hitting a six-year low of C$0.75 on Jan. 12, has agreed to pay a 10 percent deposit of the original $57 million tax assessment and make monthly payments of $4.27 million during 2016.
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.
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.
