TIRANA, Sept. 22 – Lower international oil prices and crimping oil company budgets will slow the pace of production growth in Albania from an average of 16 percent from 2010 to 2014 to 5.3 percent from 2014 to 2018, says BMI Research, a Fitch Group company in a recent report on the oil and gas sector in Albania.
“Albania’s crude oil production growth will slow in 2015 as companies’ financial positions are weakened by lower oil prices. Prospects remain good for further redevelopments at existing oil fields, while both onshore and offshore exploration offers upside potential to our oil and gas forecasts,” says the report.
Redevelopments and the application of horizontal drilling at the Patos-Marinza, Cakran, Ballsh and Gorisht fields will see crude oil production growth for 16th consecutive year in 2015.
“The 2013 Shell/Petromanas discovery at Shpirag-2 holds the strongest upside potential to our longer-term oil outlook,” says BMI Research.
The report warns an ongoing maritime border dispute with Greece increases the risk to exploration projects in the Adriatic Joni-5 block.
BMI Research says the Trans Adriatic Pipeline construction and the exploration of several fields in southern Albania will boost the non-existent natural gas market.
“The Trans-Adriatic Pipeline (TAP) – traversing Albania on its route from Greece to Italy – will boost the country’s access to natural gas from 2020. The non-existent natural gas market will be rekindled by the work on the Delvina field and exploration in Block F from 2016/2017. Production will be just 30mn cubic metres a year.”
The refining sector will benefit from growing domestic crude availability but remain low complexity due to lack of investment and a limited growth market.
“We see limited potential in the refined fuels consumption market, with weak growth and muted reaction to lower pump-prices. Diesel will continue to dominant the transport fuel sector,” says BMI Research.
Albania has selected a joint venture between Canada-based Petromanas and the Royal Dutch Shell and a subsidiary of Israeli-based Delek Group as the winners of the first two onshore oil exploration blocks.
The National Agency for Natural Resources says the race for three other onshore blocks, Panaja, C and 5, has been postponed for October 15.
Meanwhile, the Albanian government has cancelled tender procedures on the exploration of the Joni (Ionian) 5 offshore block in southern Albania which overlaps with Greece until the maritime border dispute is settled with the neighboring country.
Albania currently has 13 free onshore and offshore oil and gas block which are scheduled for concession.
Foreign investors engaged in oil and gas exploration in Albania are exempted from the 20 percent VAT, can have their exploration stage extended from 5 to 7 years and engage in production from 25 to 30 years. Studies show Albania’s oil and gas reserves are estimated at 400 million tonnes, of which around 10 percent are easily extractable.
Several international companies successfully operate in Albania’s oil sector which has seen a boost in the past decade thanks to huge investments but is currently suffering due to a sharp drop in international oil prices.
Canada-based Bankers Petroleum which operates the Patos-Marinza heavy oilfield in south-western Albania is the country’s largest foreign investor. Petromanas Energy, another Canada-based company and its Dutch partner Shell have recently made an important discovery from its Shpirag-2 well in Block 2-3, which covers an area of 3,450 square kilometres onshore south-central Albania.
