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.