The largest foreign investor in Albania, Canada-based oil producer Bankers Petroleum, said on November 30 it has been forced to consider a phasedown of its operations in Albania after the Albanian government blocked its bank accounts amid a tax dispute.
Bankers has operated in Albania since 2004, investing over $1.4bn in the redevelopment and environmental restoration of the country's largest oilfield. It accounts for around 6% of the country’s GDP meaning that scaling down or supension of some of its operations would harm Albania’s economic growth.
Bankers issued the statement after the Albanian government failed to comply with an order from the International Chamber of Commerce (ICC) to cease enforcement of its tax assessment.
The bank accounts were suspended in a bid by the Albanian tax authorities to collect $75mn, increased due to interest and penalties from the previously announced $57mn tax assessment. However, on November 21 the ICC’s International Court of Arbitration issued a stop order requiring the Albanian tax department to revoke the suspension of Bankers’ bank accounts in Albania.
The lack of access to bank accounts will begin to restrict the company’s ability to pay local contractors, import goods and export oil, Bankers said in the statement.
Late last week, Bankers completed payment of the required royalty tax on an export cargo ship. However, this cargo volume was restricted to 85% capacity it had limited funds to pay royalty tax in excess of the pre-existing credit balance, the company said.
The blocked bank accounts in Albania may force the company to curtail production towards the end of this week as available storage reaches maximum capacity due to its inability to pay taxes on subsequent shipments.
However, Bankers Petroleum said it had received assurances that the government does intend to comply with the order and that has been engaged in the dispute resolution process as demonstrated by its communications with the ICC tribunal.
“Bankers remains hopeful that a solution to this situation can be reached before further disruption to operations occurs,” the company said.
In Albania, Bankers operates the Patos-Marinza oilfield and has a 100% interest in both the Kucova oilfield and in Exploration Block F.
It is one of the largest employers in Albania, where it employs over 1,500 people including indirect employees, and its largest tax payer, paying over $550mn in taxes to the country.