Taci finalizes financing to buy Albpetrol

By bne IntelliNews November 23, 2012

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The winner of the tender to buy oil and gas firm Albpetrol, Albanian tycoon Rezart Taci's Vetro Energy, confirmed on November 22 that his group has finalised financing for the €850m deal.

Vetro Energy is currently in negotiations with the government of Albania to purchase 100% of Albpetrol shares. When complete, the deal will be one of the largest ever corporate transactions in Balkan history, equivalent to just under 10% of Albania's annual GDP.

"I am confident that the share purchase agreement with the Albanian government for the purchase of Albpetrol will be complete and successful in the very near future, as we are keen to move forward with this project and invest in Albania's future," Taci said in a statement. "Great progress between both parties has been made, but there is still a great deal of work ahead for both sides." Vetro Energy stands to secure all Albpetrol's above-ground assets and the right to explore and develop oil and gas in Albanian territory.

The sale of Albpetrol - which the Albanian government has said it is on track to complete by the December 3 deadline - to a consortium controlled by a businessman considered part of Prime Minister Sali Berisha's inner circle has raised some eyebrows. There have also been questions asked about why such a well-connected player as Taci should have offered quite so high a price for Albpetrol. Andrew Neff of IHS Energy suggests "normally you would expect someone connected with the government to be underpaying."

The runners-up in the sale of Albpetrol were China's Win Business, which offered €297m, and the next highest bid of €106m from Canada's Bankers Petroleum, which already operates the country's Patos-Marinza oilfield. Albpetrol had valued its own assets at about €320m. according to newswires.

Bankers Petroleum CEO Abdel Badwi explains in a phone interview the size of Vetro's bid by noting that the Albanian government extended Albpetrol's gas transmission rights from five years to 30 years within days of the deadline to submit bids. His company had no time to redraft its bid and do due diligence on a new offer, he complains.

The extended transmission license could add significantly to Albpetrol's profitability, Badwi reckons, should anything come of plans to build the Trans-Adriatic Pipeline (TAP), which is designed to carry Azerbaijani gas to Italy through Greece and Albania. bne contacted the director of privatisation, Fatmir Isufaj, at the Ministry of Economy, Trade and Energy to explain further the extended transmission rights, but he did not return calls or emails.

However, Andrew Neff, a senior analyst at the IHS Energy group, questions whether the extra money that was paid can be attributed to any expected revenue from the TAP, which he reckons is unlikely to be built. "Not many people in the oil industry give TAP much chance."

A more likely explanation for the high price paid for Albpetrol, Neff argues, is that Taci - a chess enthusiast - may see ownership of Albpetrol as a platform from which to take over Bankers' oilfields. Taci did not return bne's calls for comment.

It was only two days after an October 3 announcement that Albpetrol was to be sold to a "US-run consortium" that it emerged that the Singapore-registered winning consortium, called Vetro Energy, is actually 51% owned by Albanian oil magnate Rezart Taci. The remaining 49% is owned by Chicago-based SilkRoad Equity. Two US companies are also involved - Huddleston Energy Advisors and Home Creek Energy - which the company argues justifies the initial description emphasising Vetro's US credentials. Taci bought Home Creek Energy this summer, according to its president and CEO, Anthony Maye.

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