EU & WBs / Albania Energy Investment Updates

EU & WBs / Albania Energy Investment Updates

Presentation of Albanian Centre for Energy Regulation and Conservation - ACERC

ACERC is a think tank centre with focus on the Albania energy market and its integration in the regional IEM. The Acerc mission base on the in-depth knowledge of EU and regional energy law and policy and strives to provide a qualified contribution to the promotion of the liberalization and effective integration as well as efficient use of energy resources.

Acerc
main activities briefly consists in build-up collaborations and supports to market players in study researches such as the certificate reports, articles and periodicals. The transfer of high expertise through building-up institutional capacities by national and regional training courses, seminars and conferences. The institutional representation and integration within framework of the forum of Albanian School of Regulation.

For more visit us at the Official Website of Acerc | Albanian Energy Market - AEM Group in LinkedIn

Cost Oil and Profit Oil Sharing Regime of Albania Free Exploration Blocks, Lorenc Gordani | Tuesday, June 30, 2015

AEI Updates June 2015Posted by Adv. Lorenc Gordani, PhD Tue, June 30, 2015 14:18:14

Albania has announced the open tender for the Areas 4, 5 and Dumre, C and Panaja with deadline of application 15.07.2015. Meanwhile for the onshore and other offshore Areas, due to the consolidation of seismic data, to a postponed period. The "Petroleum Law", No. 7746, date 28.07.1993, authorizes the Ministry to enter into a Production Sharing Agreement (PSA).

According to "Petroleum Law", the Production Sharing Agreements PSA regard the Cost Oil and Profit Oil Sharing regime establish by first that the exploration expenditures and capital expenditures are recoverable only in the case of a commercial discovery but not before the start-up of production. Operating expenditures are recoverable during the year in which they are incurred. Reasonable and necessary administrative expenditures of the Contractor are recoverable.

A negotiable set of a sliding scale of daily production for the part of oil referred to as “profit oil” can be used to share the profit. Based on that model, the oil from which costs are recovered is referred to as "Cost Oil". The remaining part of production, which is referred to as "Profit Oil" is shared between National Agency of Natural Resources and the Contractor according to the sliding scale (bbl/day);

Or an "R” factor model can be also used to Profit Share. The "R” factor is defined as the ratio between the cumulative revenues of Contractor reduced by cumulative tax assessed on Contractor and the cumulative costs and expenses incurred in Petroleum Operations. Based on different negotiated “R”-factor values, after the Cost Oil is recovered, the remaining part of production, which in this case is referred to as “Excess Cost Oil”, is shared between National Agency of Natural Resources and the Contractor.

The Contractor is subject to tax on profit, according to the Law No. 7811, April 12, 1994, “On approval of Decree No. 782, February 22, 1994, "On the fiscal system in the hydrocarbons sector (Exploration-Production)", and the Royalty according to the Law No. 9975, July 28, 2008, “On the National Taxes”. The tax is at the rate of 50% of the realized profit and the Royalty is 10% of sales revenues. In compliance with the above-mentioned Law, The National Agency of Natural Resources takes the Government's tax and/or its share of profit oil in cash.

The Contractor shall have the right to receive and retain abroad the proceeds from its export sales to the extent not required to meet on a current basis its local currency costs in Albania. The Contractor shall have the right to convert foreign currency into local currency at the generally applicable rate of exchange for commercial transactions.

Other miscellaneous prevision regard the Contractor and its sub-contractors are allowed to import into Albania all equipment and materials required for use in petroleum operations provided that National Agency of Natural Resources has certified that equipment and materials are to be used solely in petroleum operations. By both, Law No. 7811, April 12, 1994, and Presidential Decree No. 1510, June 28, 1996, the Contractor and his sub-contractors are exempted from the customs and VAT duties and obligations either for the imported goods and services or services provided by the local market.

The Contractor may export the share of production to which he is entitled. The Contractor may assign all or part of its interest under the contract to any affiliate or third party, which assignation is subject to a guarantee for the performance of Contractor's obligations to be submitted by the assignee, as well as subject to the consent of the National Agency of Natural Resources.

The petroleum agreement and petroleum operations are governed by the laws of Albania and the generally accepted practices of International Oil Industry. Arbitration shall be in accordance with the Uncitral arbitration rules, preferably under English Law. All international oil industry investments are fully protected (as are all foreign investors) pursuant to Law No. 7764, November 22, 1993, "On Foreign Investments".

For more keep update with the EU & WBs / Albania Energy Investment Updates or visit the Official Page of ACERC.



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Bulgaria Launches Tenders for Oil, Gas Exploration Rights at Silistar, Teres Blocks, Yolian Ivanov, 30 06 2015

AEI Updates June 2015Posted by Adv. Lorenc Gordani, PhD Tue, June 30, 2015 13:12:04

The tenders for oil and natural gas exploration rights for Block 1-14 Silistar and Block 1-22 Teres, two exploration blocks located in Bulgaria's Black Sea continental shelf and exclusive economic zone, are underway.

The licenses for prospecting and/or exploration of oil and natural gas will be awarded for 5-year periods. The applicant-merchant or at least one of the participants in the applicant-corporation should have generated total net income of sales for the last 3 financial years, depending on the date on which it was established, not less than EUR 150 000 000.

The deadline for submitting applications for participation in the competition expires on the 140th day following the publication and the deadline for submitting the proposals under the competition dossier expires on the 155th day following the publication. The holders of the permits are expected to be selected in early autumn.

The launch of the competitions for the two exploration blocks is part of the commitment of the Bulgarian government to reduce the country’s dependence on imports and to develop its domestic oil and gas reserves. The government expects that the competitions will attract the attention of leading international companies in the sector.



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PSA Technical Clauses of Albania Free Exploration Blocks, Lorenc Gordani | Monday, June 29, 2015

AEI Updates June 2015Posted by Adv. Lorenc Gordani, PhD Mon, June 29, 2015 10:09:09


Albania Ministry of Energy and Industry, has announced the open of available Areas 4, 5 and Dumre, C and Panaja with deadline of application 15.07.2015. Meanwhile for the onshore and other offshore Areas, due to the consolidation of seismic data, to a postponed period. The "Petroleum Law", No. 7746, date 28.07.1993, authorizes the Ministry to enter into a Production Sharing Agreement (PSA).

According to "Petroleum Law", the Production Sharing Agreements PSA based on Technical Clauses. First of all, under the petroleum agreement the Contractor is authorized to conduct petroleum operations during an Initial Exploration period, which can be extended twice. However, it is preferred that the Exploration Period includes a drilling commitment by the Contractor. In more if the Contractor declares a commercial discovery during the exploration period, it has the right to extend for a development/production period of twenty-five years, which can be prolonged according to the "Petroleum Law".

During the exploration period, the Contractor is subject to minimum work programs and expenditure obligations. In the case of either the Initial Exploration period or the additional Exploration period expiring and the Contractor not having fulfilled its obligations for the said period, the Contractor must pay to the Government the monetary equivalent in respect of the work not carried out. All monetary obligations are expressed in US Dollars.

Before the end of each Contract year, the Contractor must submit and present to National Agency of Natural Resources the exploration program and budget for the next Contract year. National Agency of Natural Resources may suggest modifications to the said work program and budget and the Contractor shall implement them when found in accordance with good international petroleum industry practice.

In the event of a discovery, the Contractor shall notify National Agency of Natural Resources and evaluation of this discovery will be carried out pursuant to an approved appraisal work program. After appraisal, the Contractor will declare to National Agency of Natural Resources the commercial implications of the discovery.

If the Contractor considers the discovery commercial, the area in respect of that commercial discovery is set apart from the Contract area as a Development Area. The Contractor prepares then a development plan, which is submitted for approval by National Agency of Natural Resources.

For the exploitation of discovered marginal fields, or fields that have become marginal due to their exploitation, pursuant to Decree No. 782, of February 22, 1994 "On the Fiscal System in the Petroleum Sector", the Council of Ministers may issue special decisions to alleviate the fiscal system in order to render possible the exploitation of the marginal fields.

In the case of an oil discovery together with the flow of associated gas, the Contract considers the utilization of such gas. (Provisions concerning the flare and use of such gas either in petroleum operations or in the local economy are open for negotiations). Contractor has the right to develop and produce the natural gas discovered in the Contract Area. Preferably, such gas will be utilized in the internal market or exported.

In case of a commercial Natural Gas discovery, National Agency of Natural Resources and the Contractor will negotiate additional terms in the P.S.C, which will endeavour to ensure that the proportion of economic returns for both parties is similar to that for an oil discovery. National Agency of Natural Resources may process and utilize the natural gas with no compensation to the Contractor where the Contractor considers that either the natural gas is not required for use in petroleum operations, or there is no possibility of exporting it, or its utilization is not economical.

According to the "Petroleum Law", if a petroleum reservoir is located partly in the Contract Area and partly in another Contract Area and where it appears to the Ministry that gains in efficiency may be achieved through the joint development and operation of that reservoir, the Ministry shall have the right to order the Contractors to develop and operate the reservoir jointly under an agreement entered into by them for that purpose.

If at any time during the which a Petroleum Agreement is in force the petroleum bearing strata in the Contact Area, forming part of a single Commercial Discovery, overlap an area over which the Government of Albania has jurisdiction and in respect of which no contact or license has been entered into or is in force, the National Agency of Natural Resources and Contractor shall enter into an agreement to enlarge the Contact Area accordingly and to provide for the proper development of the Commercial Discovery.

For more keep update with the EU & WBs / Albania Energy Investment Updates or visit the Official Page of ACERC.



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Rama and Vucic to sign the construction of Durres-Pristine-Nis highway, May 30, 201

AEI Updates June 2015Posted by Adv. Lorenc Gordani, PhD Sun, June 28, 2015 13:25:50

Prime ministers of Albania and Serbia, Edi Rama and Aleksandar Vucic, within 15 days will sign the protocol for the project Durres-Nis.

This was confirmed by Serbian Minister of Infrastructure, Zorana Mihajlovic, "Express" reports.

She said that the project of the highway Nis-Merdare-Pristine-Tirana-Durres will cost around 1 billion euros.

"Serbia and Albania have been working for 6 months on this and we are preparing projects that the two prime ministers will present in Vienna in August" said Mihajlovic.

She emphasized that this highway will be important for connecting the region, while Serbia would provide access to the Adriatic through Albania.

She said that political stability is a prerequisite for the realization of this project.
/albeu.com/ Published on: May 30, 201

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Ailing Bosnian Oil Firm Flogs Assets to Raise Cash, Katarina Panic, 26 JUN 15

AEI Updates June 2015Posted by Adv. Lorenc Gordani, PhD Sat, June 27, 2015 13:09:01
Optima Group, the leading oil company in Bosnia’s Serb-dominated entity of Republika Srpska, has started selling its assets in an apparent attempt to deal with growing indebtedness, raising fears that the Russian investor is preparing to bail out.
One employee told Balkan Insight of a dire situation in the company, which is laying off workers and selling off or renting out its real estate to raise money.

“We are facing a downsizing of the workforce and cannot use our days off, holidays, even sick leave. Sales have dropped substantially and we suffer huge pressure because of this,” the employee told Balkan Insight on Friday.

Earlier this month, Optima Group published a tender for sales of much of its real-estate assets, a total of 19 units, including hotels, motels, houses, factory halls, land, offices, apartments and cafés across Republika Srpska, Serbia and Montenegro.The starting price for the lot has been set at some 5.4 million euro and the tender is open for another month.
The establishment of this company eight years ago was hailed as a business breakthrough for Republika Srpsa after Russia’s NeftegazInKor company – a subsidiary of Zarubezhneft – in 2007 purchased a major part of the failing RS Oil Industry.

The purchase included a share of 75 per cent of Bosanski Brod Refinery 66.75 per cent of Modrica Oil refinery and 70 per cent of Banjaluka Petrol.

Despite Russian investment, Optima Group continued operating at a loss and accrued additional debt. The worst situation is in the Brod refinery, which has accumulated the biggest losses in recent years.

According to an independent audit of the Brod refinery, carried out at the beginning of this year, the company's short-term debt now exceeds its assets by almost 20 million euro and its net debt is three times higher than its capital.

The net loss of Brod refinery at the end of 2014 was 13 million euro, while its accumulated debt exceeded 265 million euro.

“The refinery's capacity to continue functioning depends solely on the continued financial support of the mother company NeftegazInKor, Russia,” the audit by Deloitte, obtained by Balkan Insight, read.

The audit also warned that the refinery has spent significant amounts of money in suspicious transactions and was not paying most of tax and other contributions.

In addition, over a short period at the end of 2014 and beginning of 2015, the refinery took out two loans from Zarubezhneft for almost 23 million euro, most of which went directly to the Republika Srpska budget to cover unpaid taxes.

Opposition leaders and experts have claimed for years that the entity government has used Optima Group, or at least some of its companies, for money laundering. They say it is a channel through which Russia exerts influence on RS leadership.

Dragan Cavic, leader of the opposition People's Democratic Movement, NDP, said in Banjaluka on Thursday that sales of assets of Optima Group were not in line with the privatization contract with the RS government. “It seems the one and only way to solve heavy losses,” he said.

The worsening situation in the Optima Group, and especially in the Brod refinery, has sparked rumors that Russian investor may soon bail out of the unprofitable business, and either sell all of the Optima Group, or most of the loss-producing parts, keeping only those assets needed for the core business.

Sinisa Pepic, a Banjaluka-based economist, told Balkan Insight that sales of Optima Group assets could be a smart move to quickly raise some cash, but could also be a sign of something bigger.

“This might be sign that Optima Group is being prepared for sale, leaving the buyer only the core businesses assets,” Pepic said on Friday.



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Albania calls for oil & gas exploration bids

AEI Updates June 2015Posted by Adv. Lorenc Gordani, PhD Fri, June 26, 2015 21:35:57

Albania’s National Agency for Natural Resources, (AKBN) has issued the invitation for interested hydrocarbon companies to apply for exploration of free offshore blocks in Albania’s territorial seas.

After the head of Albanian Ministry of Energy and Industry (MEI), Damian Gjiknuri, announced in March this year that the Albanian government will carry out the seismic profiling in the free marine blocks, AKBN invited interested companies last week to apply for Joni 5 and Rodoni free offshore blocks.

The blocks are located in the Ionian Sea and the Adriatic Sea, respectively, offshore Albania. The deadline for application is June 25, 2015.

The AKBN has also invited all interested hydrocarbon companies to apply for free onshore blocks including Block 4, Block 5 and Block of Dumre, with the deadline for application being June 15, 2015.

The Minister also said that IIlia Gjermani will be MEI’s representative of a negotiating group that will be created for drafting the Basic Terms and Conditions of the Hydrocarbon Agreement.

According to minister’s order, AKBN will be in charge for evaluating the applications and forwarding the ones they find worthy to MEI for approval within 10 days from the deadline for the applications.

MEI will approve or reject the winning company for exploring offshore blocks within 7 days of receiving the proposal from AKBN, which means that the winning company, should there be one, will be known by the end of July 2015.

In March this year, the MEI held “Albania Oil, Gas & Energy 2015,” a two-day event where companies such as Shell, BP, Exxon Mobil, Anadarko, ENI, and Repsol were the special guests. At the event, Minister Gjiknuri said that the government will conduct competitive negotiation procedures to attract more serious companies that could afford investments in new research in Albania, in order to avoid past failures, where oil blocks were given to those “who were unable to fulfil the commitments made”.



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Terms and Conditions of Production Sharing Agreements of Albania Free Exploration Blocks, Lorenc Gordani | Thursday, June 26, 2015

AEI Updates June 2015Posted by Adv. Lorenc Gordani, PhD Fri, June 26, 2015 16:37:48


The Albania Ministry of Energy and Industry, has announced the open of available Areas 4, 5 and Dumre, C and Panaja with deadline of application 15.07.2015. Meanwhile for the onshore and other offshore Areas, due to the consolidation of seismic data, to a postponed period. The "Petroleum Law", No. 7746, date 28.07.1993, authorizes the Ministry to enter into a Production Sharing Agreement (PSA), for exploration, development PSA based on the following Terms and Conditions of Production Sharing Agreements.

According to "Petroleum Law", "Petroleum Operations" means all or any of the operations related to the exploration for development, extraction, production, separation and treatment, storage and transportation and sale or disposal of petroleum up to the point of export, or to the agreed delivery point in Albania or the point of entry into a refinery and includes natural gas processing operations but does not include petroleum refining operations.

Hydrocarbons existing in their natural state are the property of the Albanian State. The Government represented by the National Agency of Natural Resources (Decision No. 445 dated 03.09.2006) authorizes the performance of petroleum operations by the National Oil Company (Albpetrol) in its exclusive areas, or a Contractor in remainder of the territory of Albania.

The National Agency of Natural Resources is authorized to make available to interested oil companies the existing geological and geophysical data on the free areas in order to give oil companies the opportunity to evaluate the data before submitting applications. The contract type is the Production Sharing Contract (PSC) between National Agency of Natural Resources, acting on behalf of the Albanian Government, and the Contractor.

According to the "Petroleum Law", "Production Sharing Agreement" means a Petroleum Agreement which provides for the recovery of Contract Costs from Petroleum produced in the Contract Area or from a proportionate part thereof, and for the division between the State and the Contractor of the balance of petroleum remaining after the recovery of Contract Costs in accordance with a scale or formula specified in the Petroleum Agreement.

The Production Sharing Agreement includes provisions such as: The performance of a minimum work program, backed by a performance guarantee; The presentation of an annual work program and budget; Preference given to local employment and supplies during petroleum operations, where these are competitive in terms of quality, availability and cost; The opportunity for local service companies to bid and preference given to them when the offer is comparable or better than other third parties. Indemnify the State or the Ministry against all claims made by third parties in respect of injury, loss or damage resulting from the conduct of any operation carried out by the Contractor or by any subcontractor.

"The Petroleum Law" deals with access to private land after giving the occupier and the owner a minimum time notice. However, the Contractor must pay fair, just and equitable compensation with regard to any disturbance or damage caused during the conduct of petroleum operations. The P.S.C. provides for the establishment of a training and administration fund, which is used for the training of National Agency of Natural Resources employees, and for administrative purposes.

The Contractor shall conduct petroleum operations in a safe and proper manner in accordance with generally accepted international petroleum 7 industry practice and shall cause as less damage as is reasonably practicable to the general environment including (inter alias) the surface, air, seas, lakes, rivers, marine life, animal life, plant life, crops, other natural resources and property, and shall forthwith repair any damage caused to the extent reparable, and shall pay reasonable compensation for all damage which is beyond repair.

For more keep update with the EU & WBs / Albania Energy Investment Updates or visit the Official Page of ACERC.



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Form of Presentation of Applications for the Albania Free Exploration Blocks, Lorenc Gordani | Wednesday, June 24, 2015

AEI Updates June 2015Posted by Adv. Lorenc Gordani, PhD Wed, June 24, 2015 23:12:07

The Ministry of Energy and Industry, through the National Agency of Natural Resources (AKBN) has announced the opening of available onshore and offshore areas for petroleum operation. In it announce the deadline for the Areas 4, 5 and Dumre, C and Panaja are foresee for the 15.07.2015. Meanwhile for the onshore and other offshore Areas, due to the consolidation of seismic data, to a postponed period.

The Address for submitting the Applications is Agjensia Kombetare e Burimeve Natyrore Bulevardi "Bajram Curri", Blloku "Vasil Shanto" Tirana, Albania www.akbn.gov.al to the attention to: Mr. Dael Dervishi Tel +355 4 2257117 Fax +355 4 2257382

The application including all documents and materials subject to application must be delivered in a sealed envelope delivered by registered mail or in person at protocol department of AKBN. The envelope must be clearly mark: Petroleum Exploration Project CONFIDENTIAL. There is no application fee.

Presentation of applications shall be in accordance with the provisions of Item IV below, taking into account the specific terms and conditions specified in the "Petroleum Law", No. 7746, date 28.07.1993, and the Decree of the President No. 782, date 22.02.1994.

For any additional information or clarification for the application process you may contact: Agjensia Kombetare e Burimeve Natyrore Bulevardi "Bajram Curri", Blloku "Vasil Shanto" Tirana Albania to the Att. Dael Dervishi Executive Director

Form of Presentation of Applications

1. An application will be presented in a sealed envelope.

2. An applicant may present applications for more than one Area, but each application will be made in a separate envelope.

3. A company or a group of companies may apply for a contract

4. An application shall contain the following:

4.1 The contract area to which the application applies.

4.2 In respect of each applicant:

4.2.A The name of the applicant in full.

4.2.B The nature of its business.

4.2.C The place of incorporation.

4.2.D The countries in which the applicant or applicants operate.

4.2.E Evidence of the registration of the company, financial standing and technical qualifications of the applicant, including the most recent audited accounts, and those for the previous three years, of the applicant and of any corporate body having control of such applicant.

4.3. The main terms proposed by the applicant in respect of the major aspects of the model Production Sharing Agreement i.e.

4.3.A Duration of exploration periods.

4.3.B Minimum exploration work obligations and financial commitments.

4.3.C Training and Administration Funds offered.

4.3.D Cost recovery and the net profit oil for Contractor.

4.4. Each application may contain the applicant’s technical evaluation of the area and an explanation of the adequacy of the proposed minimum work commitment in support of the Contractor's exploration concepts for the area.

For more keep update with the EU & WBs / Albania Energy Investment Updates or visit the Official Page of ACERC.



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