The Albanian government has put privatisation plans for oil company Albpetrol on hold for the time being, as falling oil prices have caused interest from foreign investors to drop, energy minister Damian Gjiknuri said on December 1.

Albania has a chequered history concerning investment into its oil and gas sector. A previous attempt to privatise Albpetrol failed in 2013 amid accusations of corruption. At present, Albania’s largest foreign investor, Bankers Petroleum, has warned that it will have to scale back production if a tax dispute with the government is not resolved. However, both Royal Dutch Shell and Israel’s Delek Group are in talks over Albanian offshore blocks.

In March, Albanian prime minister Edi Rama revealed plans for a new attempt to sell off Albpetrol. Two months later, Tirana launched a procedure to start negotiations with hydrocarbon companies for the exploration of oil and gas at seven onshore and offshore blocks.

Speaking on December 1, Gjiknuri stressed out that Albpetrol “needs an overhaul”, according to a government statement. However, he added that Tirana has “given up on privatisation plans for the time being” given the expectations of a low level of investor interest.

The first attempt to privatise Albpetrol was launched several years ago. Chicago-based Vetro, owned by local tycoon Rezart Taci and bidding through a Singapore-registered consortium, offered €850m for Albpetrol, more than twice as much as the second-highest bidder. However, the deal fell through after the consortium failed to pay a €170mn down payment. The flawed tender process sparked criticism of all sides involved, and has never been fully investigated.

Several foreign oil companies do operate in Albania, of which the biggest investor is Bankers, which recently launched an arbitration process at the International Chamber of Commerce (ICC) over a tax dispute.

Also in November, international oil and gas company TransAtlantic Petroleum announced the immediate launch of a marketing process for the sale of all its oil and gas assets and operations in Albania. The company said the move was part of its operational plan to focus on “low cost, high return operations”.

However, Gjiknuri said that there is still interest in new oilfields in Albania, noting that Shell and Delek Group from Israel have launched negotiations for new oil blocks. Gjiknuri also expects that developments in the global oil sector will soon improve.

In August, the Albanian energy ministry selected a tie-up of Royal Dutch Shell and Canada’s Petromanas to carry out onshore oil exploration at Block 4, while Navitas, a unit of Israel's Delek Group, was selected for Block Dumre. Until now, the oil blocks have been under the administration of Albpetrol.