This document provides an overview of Albania's upstream oil sector and current developments. It summarizes the historical exploration and production licenses from 1903 to 1990, including the first two licensing rounds in 1992 and 1995. It then outlines the current production sharing agreements and free exploration blocks. Key points include Albania's 2014 total crude oil production of 1.4 million tons, expectations for future licensing rounds, and the legal and fiscal framework governing oil activities. The strategy aims to increase production, explore new areas, and expand refining capacity.

1. Presentation: Overall analysis of the onshore sector of Albania
and current developments
Dritan Spahiu, Director of Policies and Development of
Hydrocarbons, Ministry of Energy and Industry

2. An overall analysis of the Albanian
upstream oil sector and current
developments
Albania Oil, Gas & Energy 2015 Summit
Tirana 17 - 18 March 2015

3. Historical overview on previous licenses in upstream sector
Oil Concessions in Albania until 1944
1903 – Start of the exploration activity in Albania with
the first geological studies
1918 – Drilling of the first oil well in Drashovica, Vlore
1927 – Discovery of Kucova oilfield
1925 – Concessions to well-known companies:
 Anglo-Persian Oil Company (APOC
 AIPA (Azienda Italiana Petroli Albania)
 Standard Oil Company - New York
 Syndicate d’Etude Franco - Albanais
 The Financial Group in London
 SIMSA
1935 – First export of crude oil in Italy
1903 - 1944

4. Historical overview on previous licenses in upstream sector
Crude Oil production 1965 – 1990 (tons)
.
1945 - 1990
1945 – Nationalization of the Italian company Agip
1946 – Operation of Kuçova and Patos oilfields
1957 – Discovery of “Marinza”, the biggest oilfield
1963 – First Natural Gas discovery in Divjaka
1968 – Natural gas production at 94.81 milion Nm3
1974 – Crude oil production at 2.25 milion tons
1978 – Ballsh Refinery constructed (1 million tons)
1982 – Deepest well “Ardenica 18” drilled at 6,700 m
0
500000
1000000
1500000
2000000
2500000

5. Historical overview on previous licenses in upstream sector
First Licensing Round in 1992
.
1991 - 1995
1991 - First Offshore Licensing Round results
 Block Rodoni 1 to Deminex & OMV
 Block Adriatiku 2 to AGIP
 Block Adriatiku 3 to Occidental
 Block Adriatiku 4 to Chevron
 Block Joni 5 to Hamilton Oil
6 drilled wells with a total cost of 145 million USD.
1992 - First Onshore Licensing Round results
 Blocks B & F to SHELL
 Block C to Ina Naftaplin
 Block E to Coparex International
Profiles + 1 well with a total cost of 45 million USD.
No commercial discovery from all 7 drilled wells

6. Historical overview on previous licenses in upstream sector
Second Licensing Round in 1995
.
1995 - 2004
1995 – Second Onshore Licensing Round results
 Blocks A & 2 & 3 to Occidental
 Blocks 4 & 5 to OMV & Hellenic Petroleum
 Block 1 to Hellenic Petroleum
 Block D to Coparex
Total investments amounted to about 70 million USD.
The first oil discovery onshore Albania after 1990
was made by Occidental in 2001, after the first drilling
of Shpiragu-1 well situated in Block 2 Area.
2004 - Petroleum Agreement with OMV & Lundin
Netherlands for the offshore Durresi
2004 - Petroleum Agreement with Bankers (ex Saxon) for
Patos – Marinza oilfield

7. Petroleum Agreements in Operation up to March 2015
.
Production
1. Bankers Petroleum Albania for Patos - Marinza oilfield
2. Stream Oil & Gas for Ballsh-Hekal, Cakran - Mollaj, Gorisht - Kocul and Delvina fields
3. Sherwood International Petroleum for Kucova oilfield
4. Trans Oil Group for Visoka oilfield
5. Phoenix Petroleum for oilfields Amonice, Drashovice, Finiq-Krane, Pekisht-Murris and
gasfields Divjake, Ballaj, Pocelçe, Panaja and Frakull (all remaining Albpetrol fields)
2014 total production was appr. 1.4 million tons crude oil (est. 2015 is 1.5 mln tons).
Exploration
1. SHELL & Petromanas Albania for onshore Blocks 2 – 3 (discovery in 2013)
2. Petromanas Albania for onshore D – E blocks
3. Bankers Petroleum for onshore Block F
4. San Leon Energy for offshore Durresi block
5. Capricorn Albania for offshore Joni 5 block
6. Emanuel Adriatic Energy for offshore Blocks Adriatic 2 – 3 – 4

8. Free Exploration Blocks up to March 2015
.
Currently 13 free oil & gas Blocks
1. Block 1
2. Block 4
3. Block 5
4. Block 6
5. Block 7
6. Block 8
7. Block A
8. Block B
9. Block C
10. Block Dumre
11. Block Rodoni North (offshore)
12. Block Panaja
13. Block Velca
Very soon competitive procedures for free blocks

9. Domestic Crude Oil Production 1992 - 2013
0
200000
400000
600000
800000
1000000
1200000
1400000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
P. AGREEMENT 0 0 0 0 0 0 0 0 0 0 0 40000 29000 98924 202500 282042 361744 396903 609683 831378.1 976599 1 168 213
Albpetrol 585405 568045 535345 520866 488216 359666 364827 323009 314298 329359 350038 359255 370740 349116 316190 281147 215557 179723 132095 59886 44432 37325
P. AGREEMENT Albpetrol

10. Expectations for upstream licensing activity
.
 Not yet defined future status of state-owned company Albpetrol
 The amended petroleum law will allow the administration of free blocks from MEI
 Final draft of the Regulation for the new competitive licensing procedures
 Is considered the complete harmonization of the Directive 94/22/EC “On conditions
for granting authorizations for the exploration and production of hydrocarbons”
 Very high interest from well known international companies
 Rich database on geological & seismic data from previous exploration activities
 Increased interest from the discovery of Petromanas & SHELL in Block 2-3
 Very soon open licensing procedures for the new free blocks

11.  Country total crude oil production (2014): 1.4 million tons (2013 was 1,205,538 tons)
 Albpetrol Production (2014): 45,000 tons crude oil (2013 production 37,325 tons)
 Pre-Existing Production + Albpetrol Share (2013): 104,732 tons
 Employment: From 2,900 employees in January 2013 to ~ 2,000 employees in 2015
 Total Revenue (2014): 54 Million Euro
 Total Expensive OPEX+CAPEX (2014): 41 Million Euro
 Profit (2014): 13 Million Euro
State oil company Albpetrol main data

12. Fiscal Terms of Albanian upstream oil sector
.
 Tax on profit is at 50 % when R factor is >1
 R Factor = Accumulated Revenues / Accumulated Expenses
 Royalty Tax is at 10 % on the crude oil and natural gas sold (calculated in cash)
 Petroleum operations during Exploration Phase are VAT exempted
 Signature Bonus depends on every Petroleum Agreement
 Training Bonus depends on every Petroleum Agreement
 In compliance with the Petroleum Agreements, companies has to provide to
Albpetrol the Pre - Existing Production (65-75%) and Albpetrol’ share (1-5%)

13. Legal framework for oil activities in Albania
.
 Law no. 7746, dated 28.07.1993 “The Petroleum Law (Exploration and Production)”,
as amended, is harmonized with the Directive 94/22/EC on the conditions for granting
and using authorizations for the exploration and production of hydrocarbons.
 Creates higher security for foreign investors in the exploration and production
activities of hydrocarbons.
 Recognizes that all petroleum reserves in their natural condition in the jurisdiction of
Albania, are the exclusive property of the Albanian State.
 Permits the Ministry of Energy to enter into Petroleum Agreement with companies
with technical & financial ability for exploration and production.
 Contractors are granted exclusive rights for:
- Exploration period is up to 5 years and can be extended up to 7 years
- Production period is 25 years and can be extended with other 5 years
- Stability clause which guarantees the contractors against new laws & regulations

14. Legal framework for oil activities in Albania
.
 Petroleum Agreements are based on the Production Sharing Contract model.
 Presidential Decree no. 782, dated 22.02.1994 “Fiscal system in the hydrocarbons
sector”, amended, defines the main fiscal specifications for this sector.
 Draft Regulation on the activities of exploration and production in the upstream
sector, which regulates this industry from licensing to production.
 Secondary legislation that regulates specific aspects of activities related to:
• international standard on exploration for oil and gas
• more efficient exploitation of the oil and gas fields
• technical norms and standards for the infrastructure in the petroleum sector
• fiscal policies
• environmental issues
• etc..

15. The strategy for gas activities in Albania
.
 Successful implementation of TAP project in Albania
 Construction permit approved in April 2014 – First phase starts in June 2015
 Drafting of Gas Master Plan in 2015 financed by WBIF grant
 Gas to Power - Supply of TPP Vlore
 Supply of big industrial customers
 Construction of downstream gas infrastructure
 Construction of Ionian Adriatic Pipeline (IAP)
 Development of underground gas storage

16. The strategy for oil activities in Albania
.
 Restructuring of the state owned oil company Albpetrol
 Increase crude oil production to over 2 million tons the next years
 Efficient exploitation of existing crude oil reserves
 Use of modern technologies to increase of crude oil reserves
 Competitive licensing procedures for free oil & gas blocks
 Increase of refining capacities, since most of crude oil is exported
 Energy hub, due to proximity with Kosovo, Macedonia and Montenegro

17. Thank you for your attention!
DRITAN SPAHIU
Ministry of Energy & Industry of Albania
Director of Policies and Development of Hydrocarbons
dritan.spahiu@energjia.gov.al