TIRANA, May 15 – A new Switzerland-based company has reactivated Albania’s oil refining industry following the late 2017 bankruptcy of an Albanian-owned offshore company that managed it for a year, leading to a surge in oil imports for the first quarter of this year.
Tirana-based Byllis Energji, a subsidiary of Switzerland-based PGFS Pilotage & Gestion SA, has reportedly partially reactivated the Ballsh refinery starting April 2018 through a lease deal with a commercial bank owning it.
The reactivation of the Ballsh refiner comes following a four-month halt in domestic oil refining, making domestically produced crude oil overwhelmingly destined for exports and Albania becoming wholly reliant on imports of fuel whose prices are slowly recovering following the mid-2014 slump.
During its 14 months of operation, the IRTC company reactivated domestic oil refining under a government-backed deal with Bankers Petroleum, the Chinese-run largest oil producer in the country, which committed to sell up to two-thirds of its production to the local refiner.
The local refiner produced 156,000 metric tons of fuel from locally extracted crude oil in the first eleven months of 2017 before it went bankrupt in December 2017, leaving more than 1,000 workers jobless.
Albania imported some 400,256 metric tons of fuel in 2017, about 20 percent less than in 2016 and a record low for the past eight years, according to the customs administration.
A report by Albania’s finance ministry shows oil imports hit a record 114,828 metric tons in the first quarter of this year, up 50 percent compared to the same period last year as work in the ARMO refineries, southern Albania, was suspended due to the bankruptcy of Albanian-owned IRTC offshore company that left a mountain of debts to the tax administration, creditors and some 1,000 oil workers.
The Albanian government collects only a 10 percent royalty tax on crude oil exports, making them low-valued added exports with little impact on the economy compared to domestic refining that engages more than a thousand workers and brings more income to state coffers.
ARMO, whose 15 percent stake is still held by the Albanian government following its failed 2008 privatization, had accumulated 18.2 billion lek (€135.7 million) in debts to tax authorities in 2016, ranking the country’s largest debtor company in a list dominated by energy, construction and gambling companies, according to a report by the Supreme State Audit.
ARMO’s assets include two refineries in Ballsh and Fier and one thermal power plant, built in the 1970s under communism.
The reactivation of the domestic oil refining industry could also have a positive impact as Brent oil prices have climbed to about $70 a barrel triggering a slight increase in local oil prices.
Due to the poor quality of domestically produced oil that needs heavy refining, Bankers Petroleum usually sells crude oil at about a third below Brent prices.
Because of the high tax burden levied on fuel, Albania paradoxically has one of Europe’s highest oil prices, but suffers one of Europe’s poorest consumption rates.
At €1.41/liter, Albania’s diesel prices are almost on par with the UK and France and considerably higher compared to Europe’s superpower Germany at €1.26/litre, says the Global Petrol Prices portal.
