Bankers Petroleum

Origins and the 2004 Patos-Marinza agreementAnálisis en profundidad

Bankers Petroleum Albania Ltd. traces its origins to Saxon International Energy Ltd., which was subsequently owned by the Canadian oil and gas exploration and production company Bankers Petroleum Ltd. In 2004, the company signed a 25-year agreement with the Albanian state, concluded through the Albanian National Agency of Natural Resources and the state oil and gas company Albpetrol, for the management and exploitation of the Patos-Marinza heavy oil field. Located in the south-central region of Albania, Patos-Marinza is described as the largest onshore oil field in continental Europe.

Alongside the Patos-Marinza concession, the company also acquired rights to the Kuçova light oil field, situated 30 kilometres east of Patos-Marinza, and an exploration licence covering 'Block F', an area of 185,000 hectares adjacent to the Patos-Marinza field with identified potential for natural gas. These three assets together formed the foundation of the company's Albanian operations.

In 2006, Raiffeisen Bank extended a $20 million (€15.6 million) loan to Bankers Petroleum for the development of the oil field. This was reported as the largest loan ever made by a local bank in Albania at that time, reflecting both the scale of the project and the limited depth of the Albanian banking market for industrial finance.

Expansion, restructuring and international financing (2008–2009)Análisis en profundidad

In 2008, Bankers Petroleum separated its North American assets into a distinct entity, BNK Petroleum, and formally named its Albanian operations Bankers Petroleum Albania Ltd. Following this restructuring, the company commenced vertical and horizontal infill drilling alongside waterflood development programmes, intended to significantly increase both oil production volumes and proven reserves.

Seeking larger-scale international financing for its expanded operations, the company in 2009 secured funding commitments from the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), with combined funding up to USD 230.8 million. The involvement of these two multilateral institutions provided both capital and a degree of international institutional validation for the Albanian operation.

Acquisition by Geo-Jade Petroleum (2016)Análisis en profundidad

In January 2016, Albania's Energy Ministry announced the government's intention to renegotiate its contracts with all oil companies operating in the country, with the stated aim of reducing the margin of tax-free spending permitted under existing agreements. This policy shift formed part of the immediate context in which Bankers Petroleum decided to exit its Albanian position.

In March 2016, Bankers Petroleum agreed to sell its shares to the Chinese oil and gas company Geo-Jade Petroleum. Following approval from China's State Administration of Foreign Exchange (SAFE) in October 2016, Geo-Jade's subsidiaries completed the acquisition of all issued and outstanding common shares of Bankers Petroleum for approximately $575 million. Bankers Petroleum Albania Ltd. subsequently became a subsidiary of Geo-Jade Petroleum and has continued to operate as the dominant oil company in Albania under that ownership.

Tax dispute over investment cost amortisationAnálisis en profundidad

Under the terms of the 2004 contract with the Albanian state, the company was granted the right to defer income tax payments until its profits had fully amortised its investments. In 2015, Albanian tax authorities alleged that the company had inflated and inadequately justified its expenses in order to maintain and prolong this tax exemption. The National Agency of Natural Resources (AKBN) determined that the company's investment costs had already been covered by 2011, and that a 50% tax on profits had therefore been owed from that point.

The authorities found that the company had accumulated $247 million in what they characterised as irregular expenses, and that this had resulted in the avoidance of $60 million in taxes. Bankers Petroleum contested these calculations, asserting that it had properly documented all costs. To resolve the dispute, both parties engaged an independent auditing firm, whose findings validated the company's position. The Albanian government did not accept this outcome and pursued the case through the International Court of Arbitration, which on 18 June 2024 issued its final award in favour of the Albanian state.

Excise duty evasion and the €120 million fineAnálisis en profundidad

In 2014, the Albanian government introduced an excise duty on semi-processed solar fuel produced at the A.R.M.O. refinery in Ballsh, following concerns that the product—declared as raw material—was being sold on the open market in a manner that constituted significant tax evasion. In September 2017, following complaints received by the authorities, the General Directorate of Customs initiated an inspection of the company's premises at Patos-Marinza.

The resulting audit found widespread tax evasion, which the authorities calculated had caused a loss of EUR 30 million to the Albanian state. The company was issued a fine totalling €90 million. Bankers Petroleum contested the audit findings and sought judicial review; the first two levels of appeal produced outcomes favourable to the company. In 2022, however, the Supreme Court overturned the decisions of both lower courts and rendered the fine effective. With accumulated amounts, the total fine reached €120 million, described as the highest fine ever imposed in Albania.

Despite the Supreme Court ruling, as of the time the source article was written the fine had not been collected. The execution of the Supreme Court decision was suspended by the then Minister of Finance, Anila Denaj, who subsequently became Minister of Agriculture.

Competition authority investigation and dominant position complaintsAnálisis en profundidad

In October 2019, Albania's competition authority opened an in-depth investigation into whether Bankers Petroleum had abused its dominant position in the Albanian oil market. The investigation covered the period from 1 January 2016 to October 2019 and had been prompted, according to reporting by Reuters, by complaints to the regulator from a local refiner.

The complainant, TOSK ENERGJI SH.A., argued that Bankers Petroleum had either refused to supply it with crude oil or had imposed unacceptable conditions on its supplies, causing the company financial harm including costs associated with shutting down and restarting the refinery at Ballsh. Bankers Petroleum responded to Reuters by stating that the company had never violated free market and competition rules and denied having abused any dominant position. The article does not record a final outcome of the competition authority's investigation.

The company's overall scale in Albania provides context for both the competition complaint and its regulatory significance more broadly. Bankers Petroleum operates the Patos-Marinza field, which produces 95% of Albania's crude oil. Since entering Albania, the company is reported to have made alleged profits of €4 billion and to have paid approximately $900 million in royalties and duties, though the article does not independently verify the profit figure.