Bankers Petroleum Ltd’s warning: We will suspend production! Albanian government: The assets of Albanian people cannot be misuses!
Tirana, 2 December 2015/Independent Balkan News Agency
By Edison Kurani
In Albania, Prime Minister’s Edi Rama government has entered a “war” with international company Bankers Petroleum Ltd, which exploits the majority of oil reserves and other fuels in Albania.
The conflict between the Albanian government and Bankers Petroleum Ltd started after the General Taxation Directorate evidenced a while ago that the Canadian company owed to the Albanian state 75 million USD of unpaid tax. The Appellate Court decided to freeze this amount in the company’s accounts.
Bankers Petroleum demanded from the International Chamber of Commerce to suspend this act. The Arbitrage Tribunal ordered the Albanian government to unfreeze Banker’s bank accounts.
Even after this order, the Albanian government did not unfreeze the funds. It says that it will send the issue to the international arbitrage. Minister of Energy, Damian Gjiknuri, confirmed for IBNA that the company that will deal with this case has been contracted.
He also explains how the conflict with Bankers started: “The problem with Bankers Petroleum has been going on for a while now. It has to do with the audits that Albanian authorities have carried out in relation to the costs that the company has declared and how genuine these costs are. Why are these things done? In order to find out the real values in order for the taxpayer or the budget not to pay that part which may have been overinflated through expenses. Our oil contracts have this feature: the company must cover all the costs and expenses and once it has paid them, it can keep 50% of the profits for itself and the other 50% it must pay it to the state. The audits that have been carried out by our specialized agencies have revealed inflated costs”, Gjiknuri said. The conflict has reached arbitrage. Gjiknuri says that the Albanian authorities are taking all measures to be defended and has hired one of the most prominent international companies to protect the interests of the Albanian state.
Suspension of production? Strong retorts exchanged
While the government is trying to get hold of the 75 million USD that it claims it’s entitled too, Bankers warns a suspension of production and a shutting down of activity. Laura Cela, Banker’s official, explains the situation for IBNA: “The Government of Albania has not yet complied with the order issued by the Tribunal constituted by the International Court of Arbitration of the International Chamber of Commerce (“ICC Tribunal”) to cease enforcement of the tax assessment and revoke suspension of Bankers Petroleum Ltd Albanian bank accounts”.
The official adds: “the ICC Tribunal issued the stop order on November 21, which if complied with, would allow Bankers to operate as usual while the ICC process and third-party cost recovery audit run their course”.
This is where the clear warning made by Bankers comes: “At this time, Bankers is now forced to consider a phasedown of its Albanian operations since lack of access to the bank accounts will begin to restrict its ability to pay local contractors, import goods and export oil”.
Bankers also stresses that “without access to its Albanian bank accounts, the company’s ability to pay the taxes on subsequent shipments is compromised, which may force the company to curtail production towards the end of this week as available storage reaches maximum capacity”.
Through some communications with various Government representatives, the Company received assurances that the Government does intend to comply with the order. Additionally, the Government has been engaged in the dispute resolution process as demonstrated by its communications with the ICC Tribunal. It is expected that the Government will comply with the stop order in order to continue participation in the ICC Tribunal process. Bankers remains hopeful that a solution to this situation can be reached before further disruption to operations occurs.
But how available is the Albanian government?
In an official statement, the government says: “The Government of Albania is aware of threats made by Bankers Petroleum Ltd. to shut down or phase down operations at the Patos-Marinza oil field.
While the Government welcomes foreign and local partners, the natural resources of Albania are the patrimony of the people and should not be mismanaged or used as threats against the nation.
All companies working in Albania, whether foreign or domestic, must abide by the laws and regulations of the Republic of Albania. The Government reserves all of its options and is aware of its obligation to preserve the long-term integrity of its treasured national asset”.
Bankers has operated in Albania for the past eleven years, investing over $1.4 billion dollars in the redevelopment and environmental restoration of the country’s largest oilfield. During that time, the company grew to be Albania’s largest foreign direct investor and largest tax payer, accounting for six percent of the country’s gross domestic product and paid over $550 million in taxes to the country.
Bankers Petroleum Ltd. is a Canadian-based oil and gas exploration and production company focused on developing large oil and gas reserves. In Albania, Bankers operates and has the full rights to develop the Patos-Marinza heavy oilfield, has a 100% interest in the Kuçova oilfield, and a 100% interest in Exploration Block “F”. Bankers’ shares are traded on the Toronto Stock Exchange and the AIM Market in London, England under the stock symbol BNK.
One of the heads and main shareholders of Bankers Petroleum is General Wesley K Clark.
He retired from the United States Army in 2000, as NATO Supreme Allied Commander, Europe, following a 38 year Army career.
Gjiknuri: The continuation of production is important
Minister Gjiknuri says that the continuation of production is important for the Albanian state, “as we don’t want any companies to issue such message which would slow down or create problems with the production of oil, because this would have an impact on the Albanian economy”.
But Gjiknuri says that such warnings are unacceptable: “We cannot accept such language, which in our opinion, is unacceptable”.
When it came in power two years ago, Edi Rama’s socialist government announced that it would review privatization and concessions given during the eight years of Berisha’s government in office. There are many suspicions and information that Bankers Petroleum Ltd, which has started its work in Albania in 2004 in Patos-Marinza, the richest oil area in Albania, hasn’t paid nearly 260 million USD worth of taxes, although its profits during this period are estimated to be around 2,2 billion USD.
The company itself has rejected these accusations. According to its directors, Bankers has paid 550 million USD worth of taxes, while investments since 2004 are over 2,5 billion USD.
This is the biggest clash between the Albanian government with foreign companies that operate in Albania. A similar situation has been seen before with CEZ, the Czech state owned company which in 2009, privatized the management of the power distribution sector. But the sides managed to talk their way out of this dispute, although the debate for a corruption affair amounting to 700 million USD, still continues.
Meanwhile, the government has withdrawn several other concessions, as their annulment would have a big cost for the Albanian economy. This situation is haunting politics. The right wing opposition has accused the left wing government of sending away foreign investors, while the government accuses the opposition of signing concessionary agreements against the interests of the country. /ibna/