International oil major Shell plans to invest $42.5mn in oil and gas exploration in southern Albania over the next seven years, Albania’s National Agency of Natural Resources (NANR) said on February 20.

In 2012, Shell Upstream Albania BV, a subsidiary of Royal Dutch Shell, returned to Albania to search for oil in two blocks, 2 and 3, initially with 50% of interest, along with Canada-based Petromanas. Since March 2016, Shell has operated alone with 100% of interests in these blocks after it acquired Petromanas Albania for $45mn.

The agreement, which opens the way for onshore oil exploration at Block 4 in Shpirag, was signed by Albania’s Minister of Infrastructure and Energy Damian Gjiknuri and Shell executive Jon-Henk van Konijnenburg.

According to the agreement’s technical specifications, the oil exploration operations will be conducted in three stages, NANR said in a statement.

During the first three-year stage, 125 km of 2D (two dimensional) seismic drillings will be carried out and reprocessing of 125 km of 2D seismic profiles. The minimum cost of the first phase is estimated at about $8.5mn.

The second stage is expected to last two years and will include 300 km of 2D seismic drillings and reprocessing of the 200 km of 2D seismic profiles. Expenditures for the second stage are estimated at around $20mn.

The third phase is set to last two years and it will include drilling of a 3,000-metre deep exploration well with a minimal estimated cost of $14mn.

The contract will have duration of 25 years.

Prime Minister Edi Rama, who attended the ceremony, expressed gratitude for the company's interest in Albania’s natural resources, saying it will bring not only economic benefits, but also social development in the region.

Shell was continuing its oil and gas exploration in Blocks 2 and 3, which comprise approximately 638,000 gross acres across Albania's Berati thrust belt in southern part of the country.

In June 2016, Shell launched exploration of Shpiragu-3 well in Albania, with planned investment of €72mn. 

It is estimated that Albania has oil reserves of 220mn barrels and natural gas reserves of 5.7bn cubic metres.