TIRANA, Feb. 2 – Canada-based Petromans Energy has announced a deal to sell its minority 25 percent stake in Albania to its joint venture partner Shell Upstream Albania, a wholly-owned subsidiary of the giant Royal Dutch Shell for US$45 million, with a positive impact on Albania’s oil industry, exports and its abundant unexplored oil reserves. The deal expected to close by mid-March 2016 will make the Royal Dutch Shell the sole shareholder in the Albanian oil exploration and production operations that the joint venture has been engaged since 2012.
Shell’s increased presence in Albania comes at a time when its 2015 earnings fell by a sharp 80 percent to $3.84 billion, compared with $19 billion in 2014 on slumping oil prices.
Shell is on track to strengthen its position as Europe’s largest oil and gas company after acquiring UK-based BG Group for a staggering $50 billion in a bold move which marks the first major deal for an oil and gas producer since prices started falling last summer.
Shell officials say the company which operates in more than 70 countries has already cut about 7,500 full-time and contractor positions and that an additional 2,800 jobs would be eliminated from the two companies after the merger with BG Group.
Energy Minister Damian Gjiknuri described Shell’s expansion to Albania as good news for the Albanian oil industry despite international oil prices at a record low having reduced interest for new investments.
“This is very positive news for Albania’s oil industry. Increased interest from Shell and the arrival of Israeli oil giant Navitas Petroleum, part of the Delek Group, increases expectations for the country’s potential in the oil sector,” Gjiknuri said in a post on social networks.
Petromanas, which has been active in Albania since 2007, says it will use its proceeds to support its activities in France as it also intends to relinquish its exploration licenses in Australia.
Shell did not comment on its new acquisition.
The Royal Dutch Shell entered into a joint venture with Petromanas in February 2012 when it acquired a 50 percent stake in exchange for payments and costs of up to US$50 mln. In June 2013, Shell acquired an additional 25 percent stake into Blocks 2-3.
Last August, the Dutch-Canadian joint venture was announced the winner of Block 4, an oil exploration block onshore Albania in an international tender. Block 4, which spans approximately 560,000 gross acres (874 sq miles), is located southeast of the current production sharing contract comprising Blocks 2-3. Contract negotiations with the Albanian government continue.
In late 2015, the Dutch-Canadian joint venture also announced the delivery of a drilling rig to spud a new oil well in southern Albania. The delivery of the rig, initially scheduled for early 2015 was cancelled because of international oil prices hitting a record low but Dutch giant Shell and Canada-based Petromanas say the 3,000 horsepower drilling rig is expected to be shipped to Albania by early 2016 and used to spud the Shpirag-3 well in the second quarter of 2016.
Shpirag-3 is an appraisal well to the Shpirag-2 discovery in the southwestern region of Berat where the joint venture planned to invest an initial $42.5 in drilling.
Petromanas which also holds exploration assets in France and Australia had a 25 percent working interest in Blocks 2-3 that comprise more than 850,000 gross acres across Albania’s Berat thrust belt with the remaining 75 percent interest held by its partner, the Royal Dutch Shell.
With international oil prices at a 12-year low, oil companies operating in Albania, including the country’s biggest operator, Canada-based Bankers Petroleum, have significantly cut production and staff to handle losses, also affecting exports and royalty tax the Albanian government collects.
