TIRANA, July 4 – Albania’s oil industry could face a sharper than expected production decline this year in case the Chinese consortium that is about to take over the country’s biggest oil producer, Canada-based Bankers Petroleum, does not progress plans to complete planned well drilling in the second half of the year, according to a report published by UK-based BMI Research part of Fitch Group, a global leader in financial information services.
Canada-based Bankers Petroleum says China’s Geo Jade is expected to take over its major Albania operations by early July while U.S.-based TransAtlantic Petroleum has announced the sale of its loss-making Albanian unit to a company named GBC Oil, but will retain its interest in the southern Albania Devlina gas prospect for which it is eyeing a joint venture partner.
“Given the merger and acquisition activity at the largest operators in Albania, there are currently no rigs operating in the country. Oil production will fall 4.5 percent in 2016 due to a lack of drilling. The fall may be deeper if Geo-Jade/Bankers does not progress plans to complete 16 well conversions in H216,” says the report.
BMI expects crude and natural gas and other liquids production to drop to 22,600 barrels of oil per day (bopd) in 2016, down from 23,700 bopd in 2015 and a record high of 27,500 bopd in 2014 when oil prices were at their peak levels.
Prospects for the next four years appear pessimistic as oil production is expected to further drop to 21,700 bopd by 2020.
“Weak oil prices have essentially stalled exploration and development work in Albania’s upstream, and will negatively impact production in 2016. Two key companies are also looking to exit their position in the country as investment is pulled back,” says BMI.
In its second quarter report, Bankers Petroleum said production dropped to 15,934 barrels of oil per day (bopd), 8.2 percent below the first quarter average and that drilling activity will resume as pricing improves.
The sharp cut in international oil prices since mid-2014 has significantly affected investments in oil exploration and production with some of the key operators announcing deals to sell their Albania operations. Prospects for the remainder of the year appear more optimistic as oil prices have currently recovered to $50 a barrel.
